Researchers have demonstrated that personally experiencing something like the Great Depression has a significant impact on how we invest our money
Your grandmother’s habit of hoarding pennies in a jar notwithstanding, until now there’s been no hard evidence that economic events like the Great Depression actually change investment behavior. A study by Stefan Nagel and Ulrike Malmendier, however, stands conventional economic wisdom on its head. They have successfully demonstrated that personal experience does matter — and that the economic times we live through have a significant impact on how we invest our money.
This piece originally appeared in Stanford Business Insights from Stanford Graduate School of Business. To receive business ideas and insights from Stanford GSB click here: (To sign up: https://www.gsb.stanford.edu/insights/about/emails)