Investing in Meaning: How Symbolic Meanings Shape Lay Investor Stock Choices

This project asks how symbolic meanings may guide the stock choices of everyday (lay) investors, a critical but overlooked aspect of financial behavior.

Economics has traditionally held up the concept of the ‘rational decision-maker’ as the ideal model for how people invest (Fama, 1970; Markowitz, 1952). The applicability of this model to lay investors has been challenged by economic sociology (e.g., Fridman, 2017; Langley 2006; Preda, 2017; Roscoe, 2015; Roscoe & Howorth, 2009) and behavioral economics (e.g., Benartzi and Thaler, 1999; Kahneman and Tversky, 1979). These disciplines have provided valuable frameworks for understanding how calculation is shaped by social, cultural, technological, and psychological processes and how the pursuit of profit is bound up with neoliberalism, responsibilization and governmentality.

However, recent findings on green and socially-responsible (e.g., ESG) investing (Chatzitheodorou 2019; Tucker and Jones, 2022), crowdfunding (Yuksel et al, 2019; Huvaj et al, 2023) and the ‘meme stock’ phenomenon (Duterme, 2023; Jones, & Hietanen, 2023) suggest that lay investors’ stock ownership is not only driven by the pursuit of financial returns. It also serves as a form of self-expression, a way to align one’s financial portfolio with personal values, beliefs, and social affiliations. These findings raise the important question whether symbolic meanings, aspirations and identity concerns are specific to these socially conscious and rebellious investors, or they may also underpin ordinary investment decisions. For example, may the fact that a lay investor considers Tesla or Elon Musk ‘cool’ impacts her decision to acquire Tesla stocks? Can the childhood nostalgia for Disney or Lindt chocolates play a role in people buying their stocks?

The possibility that stocks may be viewed as identity symbols as much as financial assets represents a profound yet under-explored paradigm shift. If our proposition bears out, it would fundamentally challenge long-standing assumptions about financial stocks as purely functional instruments governed by calculative logics and would reveal them to be more complex cultural artifacts woven into the social fabric.

To explore this intriguing possibility, our research examines investment choices through the theoretical lens of symbolic consumption, borrowed from consumption studies. This theory suggests that people purchase goods not solely for their functional benefits, but also for their symbolic meanings—these items may signify ‘coolness’ or other values, affirm one’s identity, or denote membership in a desired social group (e.g., Bourdieu, 1984; Belk 1988; Arnould and Thompson 2005).

We propose a comprehensive mixed-methods strategy that marries the depth and focus of qualitative interviews with the statistical rigor and generalizability of quantitative experiments. The first phase consists of in-depth interviews with 45 lay investors from Switzerland, Israel, and the United States. Through these interviews, we aim to uncover the symbolic processes behind their stock choices, be it the cutting-edge appeal of Tesla or the comforting nostalgia associated with Disney. In the subsequent phase, we will transition to quantitative methods, employing conjoint and vignette experiments to quantify how these symbolic considerations weight against traditional financial metrics or the psychological biases identified in behavioral economics.

Through this comprehensive and innovative research strategy, we aim to offer a more nuanced understanding of investment behavior, one that accounts for both the rational and the symbolic, thereby enriching current academic discussions in the social studies of finance and consumer behavior. Moreover, in this new age of widespread financial participation, thanks in part to digital platforms and changing policies towards greater financial inclusion, our research will also provide guidelines for consumer protection.