Determinants of Risk Tolerance in the Baby Boomer Cohort

Journal of Business & Economics Research, Vol. 8, No. 5, 2010

8 Pages Posted: 12 Mar 2010 Last revised: 23 Mar 2010

See all articles by John Gilliam

John Gilliam

Texas Tech University

Swarn Chatterjee

University of Georgia

DanDan Zhu

Macquarie Group

Date Written: March 10, 2010


Using data from 26,759 respondents, this study examined the differences in financial risk tolerance among leading baby boomers and trailing baby boomers. The study also investigated differences between these two sub-cohorts in perceived risk tolerance and measured risk tolerance as determined by the FinaMetrica Risk Profiling System. The results of this study found that leading boomers were less risk tolerant than trailing boomers. Variables with a positive association with risk tolerance for both groups include higher educational attainment, income, net worth, and gender with men having higher risk tolerance than women. There was dissimilarity between married for leading boomer and trailing boomer. Being married was negatively associated with risk tolerance for leading boomers and positive for trailing boomers. It was also found that leading boomers, those with less educational attainment, lower income earners and those with a greater number of financial dependents tend to underestimate their risk tolerance.

Keywords: Financial Risk Tolerance, Perceived Risk Tolerance, Baby Boomers

JEL Classification: D03, D14

Suggested Citation

Gilliam, John and Chatterjee, Swarn and Zhu, DanDan, Determinants of Risk Tolerance in the Baby Boomer Cohort (March 10, 2010). Journal of Business & Economics Research, Vol. 8, No. 5, 2010, Available at SSRN:

John Gilliam (Contact Author)

Texas Tech University ( email )

2500 Broadway
Lubbock, TX 79409
United States

Swarn Chatterjee

University of Georgia ( email )

Athens, GA 30602-3622
United States

DanDan Zhu

Macquarie Group ( email )

18 International Finance Center
1 Harbour View St, Central
Hong Kong
Hong Kong

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