Investor Happiness

Published in Journal of Economic Psychology, 2015

Recommended citation: Merkle, Christoph, Daniel Egan and Greg Davies. (2015). "Investor happiness." Journal of Economic Psychology. 49, 167-186.

We study investor happiness in a panel survey of brokerage clients at a UK bank. When investors anticipate future happiness, they set their return aspirations according to personal portfolio risk, objectives, investment horizon, confidence, and other individual characteristics. They are accurate in their forecasts, only rarely are investors unhappy with outcomes they predicted they would be happy with, and vice versa. However, determinants of experienced happiness only partially correspond to the ones found for anticipated happiness. In particular, relative performance plays an important role investors do not anticipate. Having outperformed other people contributes to investor happiness, as does active trading success.

Published version

Free working paper version

JEL codes: D14, G02, G11.

Keywords: Happiness, Anticipation, Experience, Return expectations, Individual investors.