The Curious Link Between Tall Teenagers and the Stock Market
WHY YOU SHOULD CARE
Because investment habits are formed before you know it.
By Daniel Malloy
It all seemed so easy for them. All those statuesque high schoolers, excelling on the athletic fields and dating their fellow good-looking people, incited their share of jealousy. Adding lasting insult to temporary envy, it turns out the benefits of early growth spurts extend for decades to financial portfolios. According to a new study,
Tall teenagers are likelier to invest in the stock market when they’re adults.
There has been a bevy of data about physical attributes leading to success in the corporate world. (Name the last schlubby CEO you’ve seen on TV.) But researchers from Cornell University and the University of Miami delved beyond the so-called income premium to take a look at financial decision-making. They tapped into the wealth of data in the federal government’s National Longitudinal Survey of Youth, which measures a variety of attributes and life outcomes over decades. What they found was striking: When it comes to investment strategies, subjects’ current height didn’t really matter — but their teenage size did. Even people who end up the same height by adulthood, says Cornell assistant professor of finance Jawad M. Addoum, have vastly different life experiences based on the size of their 14-year-old selves.
Those who were taller teenagers were more likely to participate in extracurricular activities such as athletics and had more positive social experiences. “It supports this idea that they’re more confident. They’re more optimistic about the world. They have more self-esteem. They have better trust,” Addoum says. “These teenage social experiences have long-lasting effects.” While tales of bully-magnet nerds who become wealthy computer geniuses abound, they do not appear to be the norm. Addoum is careful to point out that body types do not define financial decision-making, but these are the outcomes on average.
Addoum and his colleagues also tied market participation to body mass index, finding that overweight people are less likely to buy stocks, though that behavior was tied to current characteristics rather than high school size. The reasons behind those results, Addoum says, are “more of a mystery.” He chalks it up to a mix of factors, citing research showing that obese people are likely to be more impatient, less educated and have lower self-esteem — all of which correlate with less likelihood to play the stock market.
This is a different behavior than simply making more money, but it’s one that can lead to more wealth. Despite the surge in 401(k) plans replacing traditional pensions, about half of American adults still don’t have any money in the stock market, according to a 2015 Bankrate.com study. Non-investors cite a lack of money to invest, unfamiliarity with the market and a dearth of trust.
Jeff Rose, a certified financial planner in Illinois, says if clients are going to worry themselves to death over short-term losses, he would not advise them to take risks they’re not comfortable with. But over the long haul, those who don’t expose their money to investment risk must save more or spend their golden years more frugally. “People that build wealth are action takers,” he says.
Or … you could just marry the center from the high school basketball team.