The data show a large variation in stock market participation rates across the United States. The disparities are sizable, with rates ranging from 10.5 percent in Mississippi to 26.6 percent in Connecticut. This seems reasonable, as the average household income is higher in Connecticut than in Mississippi and the existing literature shows that the participation rate increases with income.2
However, this is not the whole story. Even when controlling for household income level, the large variation in participation across states prevails. Figure 1 plots the participation rates for Connecticut, Mississippi and the United States across different income groups. The participation gap remains large for each group, indicating that household income level does not entirely lead to differences in participation rates.