January 2017

IZA DP No. 10528: Household Portfolio Choice, Reference Dependence, and the Marriage Market

Wenchao Li, Changcheng Song, Shu Xu, Junjian Yi

Forthcoming at Journal of Human Resources

This paper bridges the financial market and the marriage market using a reference-dependent mechanism. Male-biased sex ratios induce families with sons to hold more risky assets, since competitive marital payment in a tight market raises the reference level of marriage expenditure for such families. Using the 2013 China Household Finance Survey data, we find that a 0.1 increase in the sex ratio raises the probability of participating in the stock market by 25.7 percent, or the stock share of liquid wealth by 42.7 percent for families with a son; there appears no effect for families with a daughter.