Gender Differences in Financial Risk Tolerance

37 Pages Posted: 22 Sep 2017

See all articles by Patti J. Fisher

Patti J. Fisher

Virginia Polytechnic Institute & State University - Consumer Studies

Rui Yao

University of Missouri

Date Written: August 28, 2017

Abstract

The purpose of this research is to explore gender differences in financial risk tolerance using a large, nationally representative dataset, the Survey of Consumer Finances. The impact of the explanatory variables in the model is allowed to differ between men and women to decompose gender differences in financial risk tolerance. The results indicate that gender differences in financial risk tolerance are explained by gender differences in the individual determinants of financial risk tolerance, and that the disparity does not result from gender in and of itself. The individual variables that moderate the relationship between gender and high risk tolerance are income uncertainty and net worth, with income uncertainty moderating the relationship between gender and some risk tolerance. Financial fiduciaries should understand the differences in income uncertainty and net worth between men and women and how those differences relate to risk tolerance.

Keywords: Risk tolerance, Gender differences, Household behavior, Personal finance

JEL Classification: D10

Suggested Citation

Fisher, Patti J. and Yao, Rui, Gender Differences in Financial Risk Tolerance (August 28, 2017). Journal of Economic Psychology, Vol. 61, 191-202. Available at SSRN: https://ssrn.com/abstract=3028071

Patti J. Fisher (Contact Author)

Virginia Polytechnic Institute & State University - Consumer Studies ( email )

250 Drillfield Drive
Blacksburg, VA 24061
United States

HOME PAGE: http://https://sites.google.com/a/vt.edu/pattifisher/

Rui Yao

University of Missouri ( email )

239B Stanley Hall
Columbia, MO 65211
United States

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