Association between Behavioral Life-Cycle Constructs and Financial Risk Tolerance of Low-to Moderate-Income Households

14 Pages Posted: 17 Jul 2014

See all articles by Tim Griesdorn

Tim Griesdorn

University of the Incarnate Word; Iowa State University

Jean M. Lown

Utah State University - Emma Eccles Jones College of Education and Human Services

Sharon A. Devaney

Purdue University

Soo Hyun Cho

South Dakota State University

David Evans

Purdue University

Date Written: 2014

Abstract

Utilizing data from an Internet survey among low-to-moderate-income households in several states, this study examined the link between behavioral life-cycle (BLC) constructs and financial risk tolerance. The results of ordinary least squares regression indicated a positive association between financial risk tolerance and several factors that measured the BLC constructs. Respondents who scored higher in self-control had significantly higher risk tolerance scores. Smaller effects were found for the mental accounting and framing constructs. These results suggest low-to-moderate-income households can benefit from financial education and commitment strategies.

Keywords: Financial risk tolerance; Behavioral life-cycle; Self-control; Mental accounting; Framing

Suggested Citation

Griesdorn, Tim and Lown, Jean M. and Devaney, Sharon A. and Cho, Soo Hyun and Evans, David, Association between Behavioral Life-Cycle Constructs and Financial Risk Tolerance of Low-to Moderate-Income Households (2014). Journal of Financial Counseling and Planning, Vol. 25, 2014, Available at SSRN: https://ssrn.com/abstract=2466555

Tim Griesdorn (Contact Author)

University of the Incarnate Word ( email )

San Antonio, TX
United States
806-535-8888 (Phone)
210-829-3169 (Fax)

Iowa State University ( email )

613 Wallace Road
Ames, IA 50011-2063
United States

Jean M. Lown

Utah State University - Emma Eccles Jones College of Education and Human Services ( email )

Logan, UT
United States

Sharon A. Devaney

Purdue University ( email )

80 E. Stirrup Trail
Monument, CO 80132-7704
United States
719-649-1083 (Phone)

Soo Hyun Cho

South Dakota State University ( email )

2220 10th St Apt #1
Brookings, SD South Dakota 57007-0895
United States

David Evans

Purdue University ( email )

610 Purdue Mall
West Lafayette, IN 47907
United States

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