Factors Related to Household Risk Tolerance: An Ordered Probit Analysis
Sung, J. & Hanna, S. (1996). Factors related to household risk tolerance: An ordered probit analysis. Consumer Interests Annual, 42, 227-228.
10 Pages Posted: 18 Nov 2018 Last revised: 19 Nov 2018
Date Written: March 27, 1996
Risk tolerance plays an important role in each household's optimal portfolio decision. This paper estimates the effects of income and demographic characteristics on risk tolerance by employing ordered probit model. While individual with higher income, more education, self employed or farmer, married and single male were more willing to take financial risks, those age 55 or older were less willing to take financial risks.
Keywords: risk tolerance, risk aversion, Survey of Consumer Finances
JEL Classification: D14,G11
Suggested Citation: Suggested Citation