A longitudinal study of financial risk tolerance

Publisher:
Elsevier
Publication Type:
Journal Article
Citation:
Journal of Economic Psychology, 2012, 33 (4), pp. 794 - 800
Issue Date:
2012-01
Full metadata record
Files in This Item:
Filename Description Size
Thumbnail2011003687OK.pdf271.24 kB
Adobe PDF
Academics are divided as to whether financial risk tolerance is an enduring psychological trait and as a consequence is less likely to change over the life of an individual, or a variable psychological state which varies readily in response to internal and external influences. In this study we report the findings of a longitudinal study that investigates the annual change in financial risk tolerance scores of individuals over a 5. year period and the factors that influence such change. Our results indicate a relatively small annual change in individuals' financial risk tolerance. Although our regression model is ineffective in providing a clarification for a change in the financial risk tolerance scores of individual respondents, we find a slight decrease in financial risk tolerance associated with a decrease in household size and an increase in financial risk tolerance after terminating the services of a financial planner. From our results we propose that financial risk tolerance is a stable personality trait and is unlikely to change substantially over the life of an individual.
Please use this identifier to cite or link to this item: