Political Divide and the Composition of Households' Equity Portfolios

Abstract

We introduce a new measure, Partisan Portfolio Disagreement (PPD), which captures the extent to which Democratic- and Republican-leaning investors hold consistently different equity portfolios. We demonstrate how the long-term evolution of PPD can be estimated from county-level portfolio and political differences. Our findings show that PPD among wealthy U.S. households more than doubled between 2001 and 2019. By 2019, an average of 20% of Democrats' and Republicans' portfolios is subject to partisan disagreement. Leveraging the staggered county-level entry of Sinclair, a conservative television network, we provide causal evidence that political disagreement drives portfolio disagreement.

Keywords

Tags of Social Finance