Does Risk Tolerance Decrease with Age?
6 Pages Posted: 15 Jun 1998 Last revised: 19 Jul 2011
This study examines the effect of age on risk tolerance. The life-cycle investment hypothesis is tested using the 1983-89 panel of the Survey of Consumer Finances. Household wealth is defined as the sum of human capital and net worth. Risk tolerance is measured by the ratio of risky assets to total wealth. Risk tolerance increases with age when other variables are controlled.
JEL Classification: D18, D81, G11
Suggested Citation: Suggested Citation