Decomposing the Age Effect on Risk Tolerance

Yao, R., Sharpe, D. L., & Wang, F. (2011). Decomposing the age effect on risk tolerance. Journal of Socio-Economics, 40(6), 879-887.

36 Pages Posted: 2 Mar 2016

See all articles by Rui Yao

Rui Yao

University of Missouri at Columbia - Department of Personal Finance Planning

Deanna L. Sharpe

University of Missouri at Columbia

Feifei Wang

University of Missouri at Columbia - Department of Finance

Date Written: 2011

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 to 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

JEL Classification: D12, D14, G11

Suggested Citation

Yao, Rui and Sharpe, Deanna L. and Wang, Feifei, Decomposing the Age Effect on Risk Tolerance (2011). Yao, R., Sharpe, D. L., & Wang, F. (2011). Decomposing the age effect on risk tolerance. Journal of Socio-Economics, 40(6), 879-887., Available at SSRN: https://ssrn.com/abstract=2740055

Rui Yao (Contact Author)

University of Missouri at Columbia - Department of Personal Finance Planning ( email )

239 Stanley Hall
Columbia, MO 65211-7700
United States
573-882-9343 (Phone)
573-884-8389 (Fax)

HOME PAGE: http://pfp.missouri.edu/faculty_yao.html

Deanna L. Sharpe

University of Missouri at Columbia ( email )

Consumer and Family Economics
Columbia, MO 65211
United States
573-882-9652 (Phone)
573-884-8389 (Fax)

Feifei Wang

University of Missouri at Columbia - Department of Finance ( email )

Columbia, MO 65211
United States

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
113
Abstract Views
1,004
rank
263,634
PlumX Metrics