Is There a Relationship between IQ and Stock Ownership?

Bloomberg reports on an interesting study noting the relationship between IQ and ownership of equities (stocks):

Mark Grinblatt of the University of California, Los Angeles, Matti Keloharju of Aalto University in Espoo and Helsinki, Finland, and Juhani Linnainmaa at the University of Chicago compared results from intelligence tests given by the Finnish military between 1982 and 2001 to government records showing investments the draftees later held. They found the rate of stock ownership for people with the lowest scores trailed those with the highest even after adjusting for wealth, income, age and profession.

It appears the relevant paper is here. However, I am skeptical of the findings. Why look at such a specific populations subset (Finish military, which in this case was only men)? What about confounding factors such as those with higher income having more opportunities to learn about investing in stocks (and hence investing more into equities), or perhaps acting on advice of their peers? Of course, another primary objection is that the IQ exam is highly culture-dependent.

On a related note, some statistics about what percentage of American households invests in stocks:

Economists have debated for decades what they call the participation puzzle, trying to explain why more people don’t take advantage of the higher returns stocks have historically paid on savings. As few as 51 percent of American households own them, a 2009 study by the Federal Reserve found. Individual investors have pulled record cash out of U.S. equity mutual funds in the last five years as shares suffered the worst bear market since the 1930s.

Anyway, I am skeptical of the findings. What do you think?

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