An exploratory investigation of the relation between risk tolerance scores and demographic characteristics

By T. Hallahan, R. Faff, M. Mckenzie. 2003

138 citations recorded by the source corpus.

This study examines the relationship between a psychometrically derived measure of subjective financial risk tolerance and a range of demographic characteristics that are widely used as a basis for heuristically derived estimates of investors' attitudes towards financial risk. The validity of widely used demographics such as gender, age, income and wealth as determinants of risk tolerance is supported, although the relationships found are not as simple as implied by the demographic heuristics. In particular, risk tolerance exhibits concavity in respect to income across all age groups and irrespective of gender. However, education, marital status and dependents, which have been found to be significant in previous studies, were not found to be significant determinants of an individual's attitude towards risk in this study.

Subfields: Accounting, Finance, General Decision Sciences

View Paper: https://www.semanticscholar.org/paper/8c34904e512a9bf4281ddb9408b4568e3db03cf8

How researchers see this paper

The researchers whose trusted networks rank it highest, strongest advocate first. Every researcher gets a different order.

In Accounting

In Finance

In General Decision Sciences

Melissa S. Cardon

Citations in the corpus

Decomposing the Age Effect on Risk Tolerance (2011, unknown): “…(Ameriks and Zeldes, 2004; Bertaut, 1998; Bertaut and Starr-McCluer, 2000; Guiso et al., 1996; Hui and Hanna, 1997), whereas other studies used subjective or situational measures such as self-reported risk tolerance level (Chaulk et al., 2003; Grable, 2000; Hallahan et al., 2003; Yao et al., 2005).”
Impact of founder experience on exit intentions (2012, background): “However, other research indicates that, as individuals age, they have a lower tolerance for risk ( Hallahan et al. 2003; Morin and Suarez 1983), lower levels of energy and stamina (Sapienza and Grimm 1997), lower productivity (Harada 2004), and lower firm growth intentions (Lau and Busenitz 2001).”
An Empirical Investigation for Determining of the Relation Between Personal Financial Risk Tolerance and Demographic Characteristic (2010, background): “…(FRT) refers to an investor’s attitude towards risk and it can be defined as the amount of uncertainty or investment return volatility that an investor is willing to accept when making a financial decision (Faff, 2008: 2; Grable, 2000:25; Grable and Lytton, 1999b: 1; Hallahan et al., 2003: 483).”
Investors’ trading activity: A behavioural perspective and empirical results (2011, background): “Hallahan et al. (2003) considered education and marital status but they have not found evidence to support that they are significant determinants of individuals’ attitude towards risk.”