Another interesting piece of data found in the report is that although 99% of the plans offered index funds, only 53% of participants had index fund holdings. And those who held index funds or life cycle funds were less likely to make subsequent trades. That suggests that the participants who are getting into those funds understand the buy-and-hold philosophy that underlies them.

The report takes a long look at demographics, and finds further evidence to support the finding in other studies that men trade more frequently than women, although the difference is very small in this case: After all, only about 20% of the participants looked at in the study initiate any trades at all.

The study found that 76% of men were nontraders versus 83% of women, which is not an ostensibly huge difference. However, of men and women with otherwise similar demographic profiles, the men executed 91% more trades than the women. They also had turnover rates 41% to 55% higher than those of the women.

Beyond gender, other factors like wealth and job tenure also had an impact on trading activity, with people with greater wealth and longer job tenure more likely to initiate trades. Even whether a plan offers company stock or not can affect trading levels: A participant working for an employer that offered its stock through its defined contribution plan had a 21% probability of making a trade versus 19% for those participants whose employers did not offer such an option.

Overall, the study offers some interesting insights into the behaviors of 401(k) participants that could be especially valuable in the wake of the Pension Protection Act of 2006.

Other Studies Of Interest

There were a couple other articles of interest on the SSRN site. One by Lars L. Norden at Stockholm University's School of Business takes a look at the effects of lowering the exchange fee for trading OMXS 30 futures. Turns out volumes increased and spreads narrowed, while exchange revenues were unaffected. You can access the article here.

And if you are into a lot of statistical lingo, an article from the Swiss Finance Institute written by Pierre Bajgrowicz and O. Scaillet basically finds that the False Discovery Rate method of data snooping cannot be used to anticipate "trading rules" that would allow an investor to essentially game the Dow Jones Industrial Average. This article was far beyond my basic working knowledge of math and statistics, but if it sounds like your cup of tea, you can find the article here.

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