Brad Barber and Terrance Odean got access to something researchers rarely see: the complete trading records of 66,465 households at a large US discount broker, covering February 1991 to January 1997. Not a survey, not a simulation. Actual accounts, actual trades.
They sorted households into quintiles by portfolio turnover and measured what each group earned. The average household turned over 75% of its portfolio a year and earned 16.4% annually. The most active quintile earned 11.4%. The market over the same period returned 17.9%.
The gap between the average household and the heaviest traders is roughly five percentage points a year, and it comes almost entirely from costs: commissions and the bid-ask spread paid on every round trip. Gross of costs, the heavy traders did not pick worse stocks in any dramatic way. They simply paid a toll every time they changed their minds.
The authors point to overconfidence as the mechanism. If you believe your information is better than it is, you trade more, and every trade has a price. The title of the paper says the conclusion out loud: trading is hazardous to your wealth.
In a university challenge this study has an obvious use. Leaderboards reward action, and students who feel behind tend to trade their way forward. Showing them this table before the competition starts changes how the first two weeks go.
Educational material. Not investment advice.