Determinants of portfolio efficiency losses in US self-directed pension accounts

Christine W. Lai*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

Abstract

This empirical study evaluates the magnitude of efficiency losses of household portfolio choices in self-directed pension accounts (SDAs). It uses data from the Survey of Consumer Finances (SCF). The determinants of the magnitude of efficiency losses across household investors are investigated in detail. The findings of this study lend empirical support to the belief that the magnitude of efficiency losses for household investors differs with the different demographic characteristics and investment propensities. In particular, household investors with long-investment horizons, with more autonomy of choices in their SDAs, or with the tendency to select high levels of portfolio risk in SDAs are more vulnerable to efficiency losses. Factors to predict the levels of portfolio risk maintained by household investors in their SDAs are also explored.

Original languageEnglish
Pages (from-to)601-625
Number of pages25
JournalJournal of Family and Economic Issues
Volume27
Issue number4
DOIs
Publication statusPublished - 2006 Dec
Externally publishedYes

Keywords

  • Defined contribution plan
  • Efficiency losses
  • Portfolio choice

ASJC Scopus subject areas

  • Social Psychology
  • Economics and Econometrics

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