Religious Beliefs
How does someone's beliefs surrounding God affect their tendency to make risky decisions in the stock market?
01
Different Investments
Because of the beliefs put forth by various denominations, some religious people do not invest in certain stocks. As a 2012 study from Louche et. al. stated, devoutly religious people avoid stocks in industries that they may not agree with, such as alcohol or gambling. However, these differences in investing behavior do not necessarily indicate a difference in risk aversion. Religious beliefs affect the industried people invest in, but not necessarily their risk aversion.
02
Risk Aversion Index
While religious beliefs may affect the industries that people may invest in, it does not substantially affect their risk aversion index. This does, however, depend heavily on the specific denomination a person may follow. For example, a 2013 study by Noussair et. al. found that there were only small differences between those who attended church regularly and those who didn't, but that Protestants were much more risk averse than Catholics. While religious beliefs themselves may not substantially affect a person's risk aversion, the specific denomination a person follows appear to have considerable influence on their risk aversion.
Religious beliefs only have a small effect on a person's tendency to make risky decisions in the stock market or their risk aversion index. However, they may affect the stocks a person invests in, since their beliefs will cause them to avoid certain industries.