Expected Returns, Limited Asset Market Participation and Background Risk

Lead Research Organisation: University of Southampton
Department Name: School of Social Sciences


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Albornoz F (2012) Sequential exporting in Journal of International Economics

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Arrondel L (2018) Informative Social Interactions in SSRN Electronic Journal

Description The main question the research dealt with was why so many individuals do not take advantage of investing in the stock market, thereby preventing the beneficial spread of risk and channelling funds towards the real economy. Examining data for a representative sample of the population (prior to the 2007 stock market crash), we uncovered that non-participation is unusually concentrated amongst the young and that the main rationale was their lack of information about the opportunities offered by the stock market. Subsequent research effort in terms of additional data collection and analysis have confirmed this finding despite of the 2007 stock market crash. In addition, the main insight has been so far applied successfully to understand exporters performance, and it is being applied now to understand how do individuals perceive financial markets (collaboration with researchers at the Paris School of Economics and College de France, funded by INET), the effect of information networks in financial decision making (collaboration with researchers at the University of Cambridge and Goethe University Frankfurt, funded by the Keynes Fund and the Centre for Research in Finance) or the relationship between information and risk taking (collaboration with researchers at the University of Birmingham and University College London).
Exploitation Route The novel survey methodology implemented to obtain a quantitative measure of domain specific individual information was adopted by Caisse de Depots et Consignations (pubic French bank that managed the pension fund of French civil servants) in 2012, in order to contribute to the public debate about the rationale behind the opposition of the general public to the reform of the French pension system.
Sectors Creative Economy,Education,Financial Services, and Management Consultancy,Healthcare,Government, Democracy and Justice

Description The findings have been mainly used by academics, promoting new research projects (with the University of Cambridge, University College London and abroad, with the Paris School of Economics and SAFE, a research centre of excellence located at Goethe University Frankfurt), but also by public institutions (in France only, so far). The latter (Caisse de Depots et Consignations, a public French bank that manages the pension fund of French civil servants) fielded a survey that exploited the main methodological survey innovation in order to collect precise information on anticipated replacement rates and the degree of awareness of the French population on the workings of the actual pension system to understand the generalised opposition to pension reform despite of the advice of experts, academic and Government officials.
First Year Of Impact 2012
Sector Financial Services, and Management Consultancy,Government, Democracy and Justice,Other
Impact Types Societal,Policy & public services

Description ESRC Peer Review College Member
Geographic Reach National 
Policy Influence Type Membership of a guidance committee
Description Financial literacy and public pension reform
Geographic Reach National 
Policy Influence Type Membership of a guidance committee
Impact Increased public awareness on how knowledgeable French citizens are about the current public pension system, as well as public policy decision makers and experts on why and who was against public pension reform.
URL https://www.cdc.retraites.fr/portail/IMG/pdf/qr_s-le_no2.pdf
Description Sequential Exporting: how firms break into foreign markets
Geographic Reach Multiple continents/international 
Policy Influence Type Citation in systematic reviews
Impact Contributed highlighting new insights on the dynamics of exporters, and thereby to re-ignite UK's growth through exports
URL http://www.esrc.ac.uk/_images/Re-Igniting%20Growth_tcm8-24758.pdf
Description Cambridge Endowment for Research in Finance
Amount £10,000 (GBP)
Organisation University of Cambridge 
Sector Academic/University
Country United Kingdom
Start 07/2014 
End 07/2015
Description Keynes Fund
Amount £40,000 (GBP)
Funding ID 4th Round 
Organisation University of Cambridge 
Sector Academic/University
Country United Kingdom
Start 09/2014 
End 09/2015
Description NORFACE Research Programme on Migration in Europe -Social, Economic, Cultural and Policy Dynamics
Amount £700,000 (GBP)
Organisation Economic and Social Research Council 
Sector Public
Country United Kingdom
Start 09/2009 
End 09/2011
Description Strategic Research Development Fund
Amount £4,000 (GBP)
Organisation University of Southampton 
Sector Academic/University
Country United Kingdom
Start 01/2013 
End 12/2014
Title TNS 2007-2009-2011-2014 
Description The dataset is a collection of repeated cross-sections of about 4,000 households representative of the French population, with a longitudinal dimension of 2,000 individuals pair-wise, and 1,000 spanning the four waves (called PATER). It contains detailed individual data on socio-economic and demographic characteristics, as well as quantitative information on subjective expectations, preferences and attitudes towards different economic events/conditions observed during the years spanned. 
Type Of Material Database/Collection of data 
Provided To Others? No  
Impact Its main methodological innovation consists in providing novel quantitative individual information measures that are sufficient statistics of in specific environments of decision making under uncertainty. The novel methodology has been applied to further our understanding of opposition to public pension reform in France, as commissioned by the Caisse de Depots et Consignations (French public pension fund for civil servants) in an effort to contribute towards the public debate and influence policy. It is also going to be applied to understand the role of information networks in individual financial decision making, in an ongoing collaboration with Cambridge, SAFE-Frankfurt and PSE, funded by Cambridge. 
Description Associate Fellow of INET funded 'An International Network on Expectational Coordination' 
Organisation College of France
Country France 
Sector Academic/University 
PI Contribution We have contributed to the bi-annual meetings of the network members, by presenting in prestigious places and to outstanding audiences (NYU, GSE Barcelona Summer Forum, etc.); shaping the network agenda, and contributing towards its financial sustainability.
Collaborator Contribution Access to the network is providing visibility for the research carried out, high quality feedback on results and content, as well as excellent dissemination of both. In addition, fruitful avenues for future collaborations are regularly explored and discussed, leading to several short term visits to various academic institutions of world excellence.
Impact http://www.expectational-coordination.com/
Start Year 2011
Description CPC Phase II 
Organisation Economic and Social Research Council
Department Centre for Population Change
Country United Kingdom 
Sector Academic/University 
PI Contribution (On-going) Research collaborations on the economics of migration from an international perspective, and from a household finance perspective.
Collaborator Contribution Multi-disciplinary discussions on the research topic, contribution towards a joint research output, teaching buy-out of 20% pa.
Impact None so far.
Start Year 2014
Description Cambridge-SAFE-PSE 
Organisation University of Cambridge
Country United Kingdom 
Sector Academic/University 
PI Contribution We are jointly developing a macroeconomic model where agents have imperfect knowledge but are linked through networks. We have been designing a survey questionnaire to empirically test the model implications as well as enable the collection of quantitative novel information about fundamentals. I have linked Cambridge with the French team, which is collecting the survey waves with a longitudinal dimension, and with the SAFE- Goethe University Frankfurt team, with which the research program was initiated.
Collaborator Contribution Cambridge has provided knowledge inputs, seed funds to carry out a pilot study, research assistance, office space and mezzanine funding (Centre for Economic Research in Finance (10K) and the Keynes Fund (40K)) to continue the research. SAFE-Goethe University Frankfurt is providing survey design input and will provide research assistance. PSE is providing survey design input, know-how on survey collection, and access to the 2014 survey wave data on socio-economic and demographic characteristics, as well as to its longitudinal component.
Impact Designed two survey network questionnaires: one is going to be fielded in Greece, to a randomised sample of customers of a private bank; the other is still under preparation, but is going to be fielded in France in March/April and linked to the 2014 TNS survey wave (just fielded).
Start Year 2013
Description PSE 
Organisation Paris School of Economics
Country France 
Sector Academic/University 
PI Contribution We have been designing survey questions to collect novel primary survey data with a longitudinal dimension, as well as providing analysis of the data, writing research papers and disseminating the results in workshops, conferences and academic and public institutions
Collaborator Contribution They have sourced the necessary funds and established the partnerships to fund the continuous fielding of the different survey waves, analysis of the data, and collaborating in writing and dissemination of the results
Impact Three survey waves collected (2007, 2009, 2011) and one in the field (2014), with the supplementary networks module in preparation (fielded in 2015); Two research publications (2009, 2010), two discussion papers (2014, 2014) and one in preparation (2015). Three working papers in progress.