Subjective Return Expectations, Information and Stock Market Participation: Evidence from France.

Summary Recent research has separately uncovered that stock ownership strongly correlates with both expectations and realizations of stock market returns, as well as with measures of financial literacy, ability or trust. This paper reconciles all, and reports new findings from a unique survey containing individual level data on both expectations and (knowledge of) realizations for a representative sample by age and wealth. Stock market participation monotonically increases with the conditional expectation of a positive stock market return, even among the a­ uent and the young. Information is very heterogeneous, increases with age and own past experience, andidentifies a causal effect of expectations on stock ownership.