Subjective Well-being,Financial Literacy,and Family Financial Asset Allocation

Classical financial theory assumes that every economist’s behavior is rational.From the perspective of dispersing market risk and maximizing returns,each family should rationally hold a certain amount of risky financial assets.However,this is not the case.Academically,this phenomenon is summarized as "limited participation" in family finance.This has greatly reduced the liquidity of the entire financial market,driving down the efficiency of fund allocation in the financial market,while making it difficult for households to break through the existing level of financial well-being.The existing literature attempts to explain the economic phenomenon of family finance from the perspectives of demographic characteristics,family structure,and economic preferences,and to explore ways to increase the participation of family finance in the financial market.However,these studies have ignored the personal emotions of investors,and research results from neurology and psychology have shown that emotions,especially positive emotions,play a key role in people’s investment decisions.From the perspective of happiness economics,this article studies the impact of investors’ subjective well-being on the allocation of family financial assets,and innovatively adds financial literacy as a regulatory variable.Through a self-built financial literacy measurement indicator system,it analyzes the regulatory role of financial literacy in the impact of subjective well-being on family financial asset portfolios.This article first explores the impact mechanism of subjective well-being on household financial investment product allocation based on life cycle theory and behavioral finance theory.Subjective well-being affects household financial investment portfolios by influencing household savings and investment decisions,respectively.Secondly,based on modern asset portfolio theory,this paper analyzes the impact mechanism of the regulatory effect of financial literacy.Next,using the statistical data(CHFS)released by the 2019 China Household Finance Survey Center,this article establishes a binary choice Probit model for the dependent variable whether to hold risky financial assets,wealth management products,and stock assets,and constructs a Tobit model based on the depth of participation in risky financial assets held by households to study the impact of subjective well-being on the breadth and depth of participation in household financial assets.On this basis,add the regulatory variable financial literacy to study the regulatory role of financial literacy in the impact of subjective well-being on household financial asset portfolio allocation.The empirical analysis results show that subjective well-being has a significant negative impact on the allocation of financial risky financial assets in a family,and has a significant negative impact on high-risk financial assets represented by wealth management products and stocks.However,households with higher financial literacy significantly inhibit this asset allocation tendency,as evidenced by households with higher financial literacy,The more inclined they are to invest more funds in risky financial assets.In addition,this study found that there is significant urban-rural heterogeneity in the impact of subjective well-being on household financial assets.