Review of Behavioral Economics > Vol 6 > Issue 3

Does Households’ Wealth Predict the Efficiency of their Asset Mix? Empirical Evidence

Andreas Oehler, Bamberg University, Germany, Matthias Horn, Bamberg University, Germany,
Suggested Citation
Andreas Oehler and Matthias Horn (2019), "Does Households’ Wealth Predict the Efficiency of their Asset Mix? Empirical Evidence", Review of Behavioral Economics: Vol. 6: No. 3, pp 249-282.

Publication Date: 01 Aug 2019
© 2019 A. Oehler and M. Horn
Behavioral economics,  Behavioral finance,  Bounded rationality,  Heuristics
JEL Codes: D14G11
Household FinanceAsset AllocationPortfolio Composition


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In this article:
1. Introduction
2. Related Literature
3. Data and Methodology
4. Results
5. Discussion
6. Conclusions


We analyze whether the efficiency of households’ asset mixes is driven by households’ wealth as suggested by previous studies. This question is of particular importance when assessing if employing a buy-and-hold strategy with their current asset mix is an appropriate advice for all households. Using the dataset of the Panel on Household Finances by the German central bank and a new approach that extracts household-specific portfolios to measure households’ wealth available for investments, we find that more wealthy households do not have a more efficient asset mix. Instead, the gender of the financial knowledgeable person (FKP) and the household’s risk attitude significantly influence the efficiency of the household’s asset mix. Our results are robust to household members’ estimation regarding future savings and the FKP’s formal level of education and financial literacy. A buy-and-hold strategy in low-fee index products could, therefore, considerably enhance both more and less wealthy households’ investment success.