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The Cultures of Risk Tolerance

Meir Statman

Santa Clara University - Department of Finance

July 22, 2010

This study explores the links between culture and risk tolerance, based on surveys conducted in 23 countries. Altogether, more than 4,000 individuals participated in the surveys.

Risk tolerance is associated with culture. Risk tolerance is relatively low in countries where uncertainty avoidance is relatively high and in countries which are relatively individualistic. Risk tolerance is also relatively low in countries which are relatively egalitarian and harmonious. And risk tolerance is relatively high in countries where trust is relatively high.

Culture is also associated with risk tolerance indirectly, through the association between culture and income-per-capita. People in countries with relatively high income-per-capita tend to be relatively individualistic, egalitarian, and trusting. Risk tolerance is relatively high in countries with relatively low income-per-capita.

Number of Pages in PDF File: 23

Keywords: behavioral finance, household finance, culture, cross-cultural, risk tolerance, trust, individualism, collectivism, uncertainty avoidance, harmony, mastery, egalitarian, hierarchical

JEL Classification: G00, G19

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Date posted: July 24, 2010  

Suggested Citation

Statman, Meir, The Cultures of Risk Tolerance (July 22, 2010). Available at SSRN: http://ssrn.com/abstract=1647086 or http://dx.doi.org/10.2139/ssrn.1647086

Contact Information

Meir Statman (Contact Author)
Santa Clara University - Department of Finance ( email )
500 El Camino Real
Santa Clara, CA 95053
United States
408-554-4147 (Phone)
408-554-4029 (Fax)
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