More than Money: The Role of Preferences on Wealth Mobility
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Series
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SpeakersPaolo Sodini (Stockholm School of Economics, Sweden)
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FieldFinance, Accounting and Finance
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LocationErasmus University Rotterdam, Campus Woudestein, Polak 1-20
Rotterdam -
Date and time
March 24, 2026
11:45 - 13:00
Abstract
We estimate the preferences of individuals from different wealth backgrounds to explain intergenerational wealth mobility. We use rich micro-level data on the balance sheets, consumption, and risky investments of Swedish residents, together with family wealth background measured during the offspring’s early adulthood. We find that patience and risk tolerance are strongly correlated with wealth background. Counterfactual analyses reveal that background-dependent preferences can explain at least 75 percent of the wealth gap between adults of non-rich backgrounds (90 percent of the population) and very-rich backgrounds (2.5 percent of the population). In contrast, early-adulthood heterogeneity in wealth, gifts and inheritances, and intergenerational transmission of human capital are not dominant determinants of wealth mobility.