The brilliant mind of investors

  • Tarvo Vaarmets
  • Kristjan Liivamägi
  • Tõnn Talpsepp


Combining two exhaustive datasets from NASDAQ OMX Tallinn and Estonian national educational registry we dig deeper into the behaviour of the individual investor and paint a picture about how mental abilities in very different areas influence stock market participation. We use different tools of statistical analysis including probit regression models to determine what distinguishes investors from other people. The main contribution of the paper is a substantial step forward in determining how education and mental abilities influence stock market participation. We prove that investors achieve significantly higher results in their national final high school exams than non-investors. This is consistent with our main contribution – we offer strong evidences that people with higher mental abilities in very different areas are more likely to participate in the stock market. The most important factors for stock market participation are mathematics and physics. Finally we conclude that investors are not only more educated as found in previous studies, but investors also outsmart other people in every field, including both so called soft and hard sciences.


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Working Papers