Impact of gender, age, and education on investors’ behavior: An empirical study of Delhi-NCR

Demographic factors of investors have an important role in the behavior pattern of stock investors. The study focuses on analyzing impact of investors’ demographic factors such as age, gender, and educational level of retail investors in Delhi-National Capital Region. Past research has shown that investors display behavioral biases in investment decisions. These behavioral biases are nothing but the impact of perceptions and emotions of the investors. This research aims to check whether these biases vary based on gender, age, and education of investors. The retail investors from Delhi-National Capital Region were approached and their responses were collected for five behavioral biases i.e. overconfidence; anchoring; herding; loss aversion and mental accounting. Independent sample t-tests and ANOVA were used to assess survey data from 806 individual investors in Delhi-National Capital Region and to investigate the statistically significant differences. This study covers overconfidence, anchoring, herd bias, mental accounting bias, and loss aversion biases of investors. In all these biases, female investors are found to be less susceptible to overconfidence bias than male investors. The findings further depict the existence of other biases in investment decisions and how their impact varies based on gender, age, and level of education among investors. Although extensive literature on behavioral finance is available there are very few studies to specifically find out the role of gender, age, and level of education as a significant factor in biased decisions of investors. This study adds to the existing literature by attempting to fill this gap. This study is most pertinent for financial advisors, by way of it assisting them in acquiring a deeper understanding of retail investors’ psychology, thereby enabling them to develop behaviorally adapted portfolios that are customized to their clients’ personalities. The potential limitation of this study can be attributed to stage and resource constraints, as the responses are confined to Delhi-National Capital Region retail investors only.