According to Ruben Cox, Assistant Professor of Finance at Erasmus School of Economics, screening for compulsive gambling in the stock market may help to identify those active investors who are most at risk of harming their own finances. On 5 September 2018 Ruben Cox shared his research findings in the Dutch economics magazine ‘Economisch Statistische Berichten (ESB)’. This resulted in an article in the Dutch newspaper Het Financieele Dagblad. In April 2021, the research of Cox appeared again in Het Financieele Dagblad in the context of daytrading becoming more and more popular due to the coronacrisis.Â
Driven by gambling motives
Ruben Cox investigated to what extent gambling motives can explain excessive and speculative trading. Cox used five different proxies for gambling motives, ranging from fairly innocent, such as aspiring a small chance to become rich, to quite severe, namely compulsive gambling. He found that especially compulsive gambling can explain frequent trading by individual investors well, in addition to indicators for recreational gambling (e.g., in casinos). Further, investors driven by gambling motives tend to be in a significantly worse financial situation.
About Ruben Cox
Guest Professor Dr Ruben Cox specialises in behavioural economics with applications to consumer finance and governance of financial markets. He combines his appointment at Erasmus School of Economics with that of Lead in the Non-Financial Risk Strategy and Digitalization department at ING. Before joining ING, Ruben was a Senior Supervision Officer and Project Manager at the Dutch Authority for the Financial Markets (AFM) in the Capital Markets and Expert Centre division. He has been involved in the redesign and implementation of supervision-strategies across a variety of domains. He teaches corporate finance and business valuation and taught a variety of courses on behavioural finance, real estate finance, and research methods in the past.
Downloads
- More information
The full article from ESB, and Het Financieele Dagblad from 2018 and 2021, can be downloaded above (in Dutch).Â