Who is the average individual investor? Numerical skills and implications for accounting research

Behavioral research in financial accounting often aims to address issues relevant to individual, nonprofessional investors, citing the importance of individual investors to capital markets or regulators’ concerns for the “average” investor. Analyzing national samples of financial capability skills in the United States along with a relatively large sample of participants recruited from Amazon’s Mechanical Turk platform (MTurk; n>2,000), this research first examines investors’ demographic characteristics and numerical skills relative to non-investors, thus contributing to our understanding of the “average” individual investor’s skills and perceptions and to our understanding of the range of skills and perceptions in the broader individual investor population. A sample of three extant accounting research experiments are then replicated with the MTurk participant pool; however, these replicated results tend to be driven by participants with investment experience and higher numerical skills. These findings suggest that limiting the pool of participants in the original research increases the power of the statistical tests, but doing so may overstate the generalizability of the findings to less sophisticated investor populations. This research emphasizes the need for careful consideration of the research motivation and the potential match between the applied theory and the population of interest in empirical research.