Family Mental Health And Asset Allocation

In financial markets,households are both major consumers and important investors.As one of the three major sectors of the national economy,the family’s investment behavior not only reflects their living standard,but also is an indispensable driving force for the growth of the national economy.Family asset allocation gradually becomes a focus in the study of finance.Behavioral finance explores the family asset allocation from the perspective of cognitive ability,emotion and other psychological factors.Therefore,the article holds that mental health,which is mainly manifested by emotion,may be a key variable affecting family asset allocation.It should be considered in the asset allocation model.So,we will focus on how family mental health affects the asset allocation structure.This paper reviews the research literature related to family asset selection and summarizes the influence mechanism of mental health on asset allocation behavior.We believe deterioration of family mental health status may increase risk aversion.When faced with volatile,risky assets such as stocks,funds and investment properties,these households are often unwilling to tolerate the psychological insecurity that comes with such volatile uncertainty.As a result,households are more likely to adopt risk-averse investment strategies.They will invest more in safer,productive assets and hold less risky ones,eventually keeping total household risk at a modest level.The Chinese household tracking survey(CFPS)conducted by Peking University’s China social science survey center(ISSS)nationwide in 2016 was selected as the sample.We used Tobit model and ordered Probit model to explore the influence of mental health on family asset allocation and its influence path from the perspective of family.The empirical study found that: first,under the premise of controlling physical health factors,mental health is an important factor affecting the family portfolio.The mental health risk measured by the proportion of non-mental health members has a significant negative effect on the holding proportion of risky financial assets and investment property,while a significant positive effect on the productive assets.In addition,we also found that health risk was still an important factor influencing household investment decisions in high-income and sandwich households.Second,through the mediating effect model,this paper verifies that risk attitude is an important mediating variable that mental health affects family asset allocation.Third,the impact of mental health on family investment decisions varies across age groups.The life cycle effect is significant.The deterioration in mental health prompted young families to allocate more productive assets to hedge mental health risks,but had no significant impact on risky financial assets or investment property.Among middle-aged families,mental health was negatively correlated with the proportion of risky financial assets and investment property.For older families,the exposure to physical health is relatively large.Therefore,compared with mental health factors,physical health has a greater impact on family asset allocation.