Determinants of Portfolio Efficiency Losses in US Self-directed Pension Accounts

This empirical study evaluates the magnitude of efficiency losses of household portfolio choices in self-directed pension accounts (SDAs). It uses data from the Survey of Consumer Finances (SCF). The determinants of the magnitude of efficiency losses across household investors are investigated in de...

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Bibliographic Details
Published in:Journal of family and economic issues 2006-12, Vol.27 (4), p.601-625
Main Author: Lai, Christine W
Format: Article
Language:English
Subjects:
Annual reports
Asset allocation
Cost control
Defined contribution plans
Economic losses
Economic models
Efficiency
Family income
Household economics
Households
Investments
Investors
Losses
Opportunity costs
Pension funds
Pension schemes
Portfolio diversification
Portfolio management
Portfolio performance
Retirement pensions
Risk aversion
Stocks
Studies
Tax rates
U.S.A
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Summary:This empirical study evaluates the magnitude of efficiency losses of household portfolio choices in self-directed pension accounts (SDAs). It uses data from the Survey of Consumer Finances (SCF). The determinants of the magnitude of efficiency losses across household investors are investigated in detail. The findings of this study lend empirical support to the belief that the magnitude of efficiency losses for household investors differs with the different demographic characteristics and investment propensities. In particular, household investors with long-investment horizons, with more autonomy of choices in their SDAs, or with the tendency to select high levels of portfolio risk in SDAs are more vulnerable to efficiency losses. Factors to predict the levels of portfolio risk maintained by household investors in their SDAs are also explored. [PUBLICATION ABSTRACT]
ISSN:1058-0476
1573-3475
DOI:10.1007/s10834-006-9033-8