Does Mental Health Affect Household Stock Investment Decisions?

Since household finance became an independent financial research field following asset pricing and corporate finance in 2006,there have been numerous stu dies related to household investment decisions and household asset allocation.These results enable us to understand the behavior and constraints of household financial asset selection.This paper holds that as one of the background factors,mental health may be the key factor affecting family investment decision-making.Based on this idea,this paper constructs an empirical model for research.This paper summarizes the possible influence mechanism of mental health on investment decision making on the basis of existing research results.Among them,"cognitive ability" is an important part of the influencing mechanism,but few literatures have carried out in-depth studies on this.Medically related research shows that mental health deterioration can affect cognitive ability.In this context,the ability of decision makers to receive,process and store information will be limited,thus affecting investors to optimize their investment behavior,and ultimately affecting their enthusiasm to participate in the stock market.In this paper,using the data of the English Longitudinal Study on Ageing(ELSA)from 2002 to 2012,with mental health risk as the core explanatory variable,Probit,Tobit and OLS models were established respectively for the three explanatory variables of whether the family in the sample participated in the stock market,the depth of stock investment and the amount of stock investment,and regression analysis was conducted.The results show that:first,mental health is an important factor affecting family stock investment decision,and there is a significant negative relationship between them.When the mental health of decision-makers deteriorates,households are less likely to participate in the stock market,and the proportion of stock assets held by households participating in the stock market also decreases,and the corresponding stock investment also decreases.Second,cognitive ability plays a partial mediating role in the above influence process.Thirdly,for families of different income levels,mental health is an important factor affecting their stock investment decisions.But the effect is more pronounced for low-income families.Households with working heads were more likely to adopt a conservative stock strategy when faced with mental health risks than households without working heads.The above conclusions are still robust after substituting variables,delaying core explanatory variables by one period,and deleting unreliable samples.