Does Cognitive Abilities Affect Household Portfolio Diversification

Since Markowitz,the father of portfolio theory,proposed the mean variance model,uncountable related researches have come to the fore,and the field of home finance has become an important part of the academic research in recent years.The core is to regard the family as a unit.The current status of the family and the future income expectations,make various financial decisions to meet the needs of the family,of which the concept of investment decentralization is the core pillar of the classic investment theory.However,a large number of microscopic empirical studies diametrically opposed to the theoretical results followed.Affected and questioned by empirical research,standardizing household finance research attempts to promote the development of research by relaxing the model assumption.What can not be ignored is this angle of human capital.With the continuous review of the limitation of the number of years of education in traditional human capital,the framework of new human capital is gradually formed.It opens the black box of the capacity formation process and forms A theoretical framework for a more reliable system with capabilities at the core.In general,a large number of papers in the field of family finance study the choice of investment portfolio from the perspective of financial knowledge and financial literacy.From the perspective of cognitive ability,which is a measure of human intrinsic ability,there are relatively few studies on the situation of family investment portfolio.In this paper,based on the 2014 court follow-up survey(CFPS)database and literature review,cognitive ability index and investment decentralization index are constructed,Poisson model and mlogit model are used to explore the possible impact of cognitive ability on the diversification of household investment in China,and different aspects of cognitive ability,namely memory ability and mathematical calculation,are considered The influence of calculation ability,word ability and sequence reasoning ability on investment decentralization is further analyzed.Then,we analyze and test various robustness and endogeneity problems to prove that the conclusion of this paper is stable and significant.Empirical research shows that cognitive ability has a significant impact on household participation in financial market and investment decentralization.Compared with the years of education,cognitive ability has a much stronger explanatory power on household investment decentralization;comprehensive cognitive ability is much stronger,mathematical calculation ability,reasoning ability and word ability all have significant positive effects on investment decentralization.Under the hypothesis of complex investment strategy,comprehensive cognitive ability still has a very significant impact.Word ability and reasoning ability have a significant impact on some combinations.Generally speaking,in all directions of cognitive ability,word ability has a significant impact on family investment decentralization Other variables,including health,family wealth,ownership of real estate,network use,urban and rural categories,have a significant impact on the decentralization of family investment to some extent.