Decomposing the age effect on risk tolerance

Rui Yao, Deanna L. Sharpe and Feifei Wang

Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), 2011, vol. 40, issue 6, 879-887

Abstract: The importance of investment portfolio allocation has become more apparent since the onset of the late 2000s Great Recession. Individual willingness to take financial risks affects portfolio decisions and investment returns among other factors. Previous research found that people of different ages have dissimilar levels of risk tolerance but the effects of generation, period, and aging were confounded. Using the 1998–2007 Survey of Consumer Finances cross-sectional datasets, this study uses an analytical method to separate such effects on financial risk tolerance. Aging and period effects on financial risk tolerance were statistically significant. Implications for researchers and financial planning practitioners and educators are provided.

Keywords: Attitudes; Generation; Period effect; Risk tolerance; Survey of Consumer Finances (search for similar items in EconPapers)
JEL-codes: D12 D14 G11 (search for similar items in EconPapers)
Date: 2011
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Citations: View citations in EconPapers (35)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:soceco:v:40:y:2011:i:6:p:879-887

DOI: 10.1016/j.socec.2011.08.023

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