HEIGHT AND INCOME EFFECTS ON STOCK INVESTMENTS IN CHINA

Abstract

This paper examines the relationship between physical attributes such as height (or weight) and household investment decisions in China. Using survey data from the China Family Panel Studies (CFPS), I find that households with taller family heads are more likely to invest in stocks and that weight (BMI) does not seem to have any effects on Chinese household stock market participation. The empirical methodology used in this paper are a series of fixed-effect regression models. After confirming the existence of a positive height effect on stock market participation in China, further analysis is done to look for channels that could explain such an effect. My findings suggest the two channels are income and cognitive abilities, and that the income channel plays a major role. Finally, ancillary regressions confirm the existence of a height premium on both income and education in China.