Political Realignment and Household Portfolio Choice : Evidence from the 2016 U.S. Presidential Election

Abstract

This thesis examines whether the 2016 US presidential election affected how American households allocated their portfolios, and whether this effect depended on a state's political trajectory. Using five waves of PSID panel data (2011-2019) and a difference-in-differences design, it classifies states by their political trajectory between 2012 and 2016 and tracks five components of household wealth. Households in states that flipped to Trump reduced their stocks share by roughly one to one and a half percentage points more than comparable households elsewhere, a result that holds under several robustness checks but does not survive correction for multiple testing. No comparable pattern emerges for the other four portfolio components.