Housing and Portfolio Choices in France

In this paper, we focus on the interactions between housing wealth and the composition of households' financial portfolio. We use a very survey among French households (Enquete Patrimoine, Insee) to describe the composition of housing and financial wealth of French households. We estimate the main determinants of housing wealth (as primary, secondary residences as well as investments in real estate). We study the impact of the exposure to real estate risk on stock demand. We find that, besides information and transaction costs and risk aversion, housing wealth is a key determinant of stockownership: households facing real estate risk tend to moderate their investments in stocks. This behaviour, called "temperance", may thus contribute to explain why people own so few stocks, in particular in France (stock participation puzzle).