DP14264 The Obama Effect: Heightened Risk Tolerance, Optimism, and Wealth Accumulation by Minorities after 2008
We study the financial behavior of minorities over 2007-09. We find that after 2008 and compared to whites, African Americans and Hispanics have a higher propensity to increase risk tolerance, optimism, and allocations to risky assets and lower probability of exiting the stock market. These findings cannot be explained by changes in wealth or income, and we ascribe them to the positive effects of President Obama who is a role model for minorities. Specifically, we find that the change in behavior by minorities is consistent with minorities updating their beliefs about future economic outcomes.