Table 4. Factors associated with portfolio inertia (versus active management): key marginal effects from a descriptive logit analysis of simulated and PSID data.
Each column of this table reports the estimated impact of key variables from separate logit regressions, where the dependent variable equals one if the individual elected inertia in that period, or zero if active management. The first column reports results from simulated data from our life cycle model. The second and third columns report results from the full PSID sample and the subsample of non-business owners. Standard errors in parentheses.
| Inertia chosen (versus active management) | |||
|---|---|---|---|
| Simulated data | PSID data | PSID (non-business) | |
| Log wealth | −1.868*** (0.01) |
−0.084*** (0.01) |
−0.083*** (0.01) |
| Stock market shock | −0.139*** (0.04) |
−0.267 (0.18) |
−0.339* (0.19) |
| Wage shock | 1.304*** (0.10) |
0.056*** (0.02) |
0.055** (0.02) |
*, **, and *** indicate statistical significance at the 10%, 5%, and 1% levels, respectively. See online Appendix E for more on variable construction and controls.