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Estimation and Impact of Gender Differences in Risk Tolerance

6 Pages Posted: 26 Jan 2010  

Urvi Neelakantan

Federal Reserve Banks - Federal Reserve Bank of Richmond

Abstract

This paper provides numerical estimates of the distributions of risk tolerance for men and women. A simple model of individual portfolio choice is calibrated to data on Individual Retirement Accounts from the Health and Retirement Study to obtain the estimates. Results show that women tend to be less risk-tolerant than men. The estimates are then used to measure the impact of risk tolerance on wealth accumulation. Simulations show that the difference in risk tolerance can account for around 10% of the gender difference in accumulated wealth.

JEL Classification: J16, G11, D81

Suggested Citation

Neelakantan, Urvi, Estimation and Impact of Gender Differences in Risk Tolerance. Economic Inquiry, Vol. 48, No. 1, pp. 228-233, January 2010. Available at SSRN: https://ssrn.com/abstract=1542304 or http://dx.doi.org/10.1111/j.1465-7295.2009.00251.x

Urvi Neelakantan (Contact Author)

Federal Reserve Banks - Federal Reserve Bank of Richmond ( email )

P.O. Box 27622
Richmond, VA 23261
United States

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