Risky Business: Speeding and Trading
It’s hardly news in the traffic psychology world that people who routinely speed fall under the category of what are called “sensation-seekers.” But it’s always interesting to see just who those people are, and how this behavior correlates with other areas of their life.
A study by Mark Grinblatt, a professor of finance at the University of California, Los Angeles, and Matti Keloharju, a finance professor at the Helsinki School of Economics, titled “Sensation Seeking, Overconfidence and Trading Activity” (available here), gets at that question in an interesting way.
They had access to an interesting data set: A record of investing behavior among Finnish households that had, scattered amongst its sub-categories, the number of speeding tickets those households received. And they found an interesting relationship: “Each additional speeding ticket tends to increase turnover by 11%.” In other words, the people who sped the most, traded the most.
The economists were really looking to find evidence of whether behavioral attributes could explain trading volume, but the finding is just as relevant for driving. Whether it was down to sensation-seeking or, perhaps, overconfidence, the riskiest investors took the most risks on the road. And given that this was Finland, where speeding tickets for violations over 15 kph are related to one’s income, the risks one took could bear a high financial (and personal) cost. Interestingly, those who traded most didn’t see better performance than those who traded less (not to mention all the money they probably lost to speeding tickets). And it will surprise no one that “sports cars,” as a variable, were more linked to the most active traders, though not as much as speeding tickets.
This entry was posted on Thursday, November 13th, 2008 at 4:43 pm and is filed under Drivers, Etc., Risk, Traffic Enforcement, Traffic Psychology, Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.
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