Peer Effects Among Teachers: A Study of Retirement Investments
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Using a unique matched-panel dataset that combines detailed demographic information from the Florida Department of Education’s annual survey of school districts with investment information from the Florida State Board of Administration for 2002–2009, this paper looks for the presence of peer effects among Florida Defined Contribution plan participants at the school level. Overall, the regression results suggest a small, but significant peer effect on asset allocations and activity level. A 1 standard deviation change in initial peer equity yielded a 0.04 standard deviation change in equity reallocation. This is in comparison to a 1 standard deviation change in the individual’s own initial equity allocation, which would yield a 0.16 standard deviation change in equity allocation. For activity level, a 5.2% change in peer activity level increased the likelihood of a participant being active by 1.8%. The findings are reinforced by similar analysis using false peer groups. These findings suggest the presence of a social multiplier for coworker investment decisions.
KeywordsPeer effects Investment allocation Investor behavior
James Farrell was employed by the State Board of Administration from 2008 to 2010, no additional funding was provided for this paper.
Conflict of interest
James Farrell has no other conflicts of interest.
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