Does Risk Tolerance Decrease with Age?

Wang, Hui; Hanna, Sherman D.

doi:10.2139/ssrn.95489

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Does Risk Tolerance Decrease with Age?

Financial Counseling and Planning, Vol. 8, Issue 2

6 Pages Posted: 15 Jun 1998 Last revised: 19 Jul 2011

See all articles by Hui Wang

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

Wang, Hui and Hanna, Sherman D., Does Risk Tolerance Decrease with Age?. Financial Counseling and Planning, Vol. 8, Issue 2, Available at SSRN: https://ssrn.com/abstract=95489 or http://dx.doi.org/10.2139/ssrn.95489