Measuring the perception of financial risk tolerance:A tale of two measures

Journal of Financial Counseling and Planning

Volumn 21, Issue 2, 2010, Pages 30-43

  Gilliam, John ^a   Chatterjee, Swarn ^b   Grable, John ^c  

^a TEXAS TECH UNIVERSITY   (United States)

^b UNIVERSITY OF GEORGIA   (United States)

^c KANSAS STATE UNIVERSITY   (United States)

Author keywords

Financial risk tolerance; Investment risk; Risky assets; Survey of consumer finances

Indexed keywords

EID: 79958815178     PISSN: 10523073     EISSN: 19477910     Source Type: Journal    
DOI: None     Document Type: Article

References (46)

1. Ameriks, J., & Zeldes, S. P. (2000). How do household portfolio shares vary with age? Unpublished manuscript, Columbia University.
2. Babbie, E. R. (1983). The practice of social research. Belmont, CA: Wadsworth Publishing Company.
3. Barsky, R. B., Juster, F. T., Kimball, M. S., & Shapiro, M. D. (1997). Preference parameters and behavioral heterogeneity: An experimental approach in the health and retirement study. The Quarterly Journal of Economics, 5, 537-579.
4. Bonoma, T. V., & Schlenker, B. R. (1978). The SEU calculus: Effects of response mode, sex and sex role on uncertain decisions. Decision Sciences, 9, 206-227.
5. Chaulk, B., Johnson, P. J., & Bulcroft, R. (2003). Effects of marriage and children on financial risk tolerance: A synthesis of family development and prospect theory. Journal of Family and Economic Issues, 24(3), 257-279.
6. Chen, P., & Finke, M. S. (1996). Negative net worth and the life cycle hypothesis. Financial Counseling and Planning, 7, 87-96.
7. Coleman, S. (2003). Risk tolerance and the investment behavior of Black and Hispanic heads of household. Financial Counseling and Planning, 14(2), 43-52.
8. Culter, N. E. (1995). Three myths of risk-tolerance: What clients are not telling you. Journal of the American Society of CLU and ChFC, 49, 33-37.
9. Ding, J., & DeVaney, S. A. (2000). Predictors of emergency fund adequacy. Proceedings of the Association for Financial Counseling and Planning Education.
10. Embry, L. C., & Fox, J. J. (1997). Gender differences in the investment decision-making process. Financial Counseling and Planning, 8(2), 33-40.
11. Finke, M. S., Huston, S. J., & Sharpe, D. L. (2005). Balance sheet changes among pre-retirement cohorts during the 1990s: How do boomers compare? Consumer Interests Annual, 51.
12. Finke, M. S., & Huston, S. J. (2003). The brighter side of financial risk: Financial risk tolerance and wealth. Journal of Family and Economic Issues, 24(3), 233-256.
13. Garson, G. D. (2008). Multiple regression. In Statnotes: Topics in multivariate analysis. Retrieved from http://www2.chass.ncsu.edu/garson/pa765/statnote.htm
14. Grable, J. E., & Lytton, R. H. (1999). Financial risk tolerance revisited: The development of a risk assessment instrument. Financial Services Review, 8, 163-181.
15. Grable, J. E., & Lytton, R. H. (2001). Assessing the concurrent validity of the SCF risk tolerance question. Financial Counseling and Planning, 12(2), 43-52.
16. Grable, J. E., & Lytton, R. H. (2003). The development of a risk assessment instrument: A follow-up study. Financial Services Review, 12, 257-274.
17. Grable, J. E., & Schumm, W. (2007). An estimation of the reliability of the Survey of Consumer Finances risktolerance question. TCAI Working Paper: University of Arizona.
18. Gutter, M. S., & Fontes, A. (2006). Racial differences in risky asset ownership: A two-stage model of the investment decision-making process. Financial Counseling and Planning, 17(2), 64-78.
19. Gutter, M. S., Fox, J. J., & Montalto, C. P. (1999). Racial differences in investor decision making. Financial Services Review, 8(3), 149-163.
20. Hanna, S. D., & Chen, P. (1997). Subjective and objective risk tolerance: Implications for optimal portfolios. Financial Counseling and Planning, 8(2), 17-26.
21. Hanna, S. D., Gutter, M., & Fan, J. (2001). A measure of risk tolerance based on economic theory. Financial Counseling and Planning, 12(2), 53-60.
22. Hanna, S. D., & Lindamood, S. (2004). An improved measure of risk aversion. Financial Counseling and Planning, 15(2), 27-38.
23. Heaton, J., & Lucas, D. J. (2000). Portfolio choice and asset prices: The importance of entrepreneurial risk. Journal of Finance, 55, 1163-1198.
24. Haurin, D. R., Hendershott, P. H., & Wachter, S. M. (1996). Wealth accumulation and housing choices of young households: An exploratory investigation. Journal of Housing Research, 7, 33-57.
25. LRN-RAND Center for Corporate Ethics, Law and Governance. (2008). Retrieved from http://www.sec.gov/news/press/2008/2008-1_randiabdreport.pdf
26. Litwin, M. S. (1995). How to measure survey reliability and validity. Thousand Oaks, CA: Sage Publications.
27. Markowitz, H. M. (1952). Portfolio selection. Journal of Finance, 7, 77-91.
28. McCrae, M. (2004). Risk attitude profiling by financial planners: The effects of framing on assessment validity. AFS Proceedings (pp. 1-25). CD-Rom proceedings: AFS, CD Proceedings.
29. Myers, R. (1990). Classical and modern regression with applications (2nd ed.). Boston: Duxbury Press.
30. O'Brien, R. M. (2007). A caution regarding rules of thumb for variance inflation factors. Quality and Quantity, 41(5), 673-690.
31. O'Neill, B., Xiao, J. J., Bristow, B., Brennan, P., & Kerbel, C. M. (2000). Successful goal attainment: Perceived resources and obstacles. Financial Counseling and Planning, 11(1), 1-12.
32. Roszkowski, M. J., Davey, G., & Grable, J. E. (2005). Questioning the questionnaire method: Insights on measuring risk tolerance from psychology and psychometrics. Journal of Financial Planning, 18(4), 68-76.
33. Shorrocks, A. F. (1975). On stochastic models of size distributions. Review of Economic Studies, 42, 631-641.
34. Springstead, G. R., & Wilson, T. M. (2000). Participation in voluntary individual savings accounts: An analysis of IRAs, 401(k)s, and the TSP. Social Security Bulletin, 63(1), 34-39.
35. Sunden, A. E., & Surette, B. J. (1998). Gender differences in the allocation of assets in retirement savings plans, American Economic Review. 88(2), 207-211.
36. Sung, J., & Hanna, S. (1996). Factors related to risk tolerance. Financial Counseling and Planning, 7, 11-20.
37. Wallach, M. A., & Kogan, N. (1959). Sex differences and judgment processes. Journal of Personality, 27, 555-564.
38. Wang, C., & Hanna, S. D. (2007). The risk tolerance and stock ownership of business owning households. Financial Counseling and Planning, 18(2), 3-18.
39. Weber, E. U., Blais, A. R., & Betz, N. E. (2002). A domain- specific risk-attitude scale: Measuring risk perceptions and risk behaviors. Journal of Behavioral Decision Making, 15, 263-290.
40. Wooldridge, J. M. (2006). Introductory econometrics: A modern approach. Southwestern Thomson Learning: Mason, OH.
41. Xiao, J. J. (1996). Effects of family income and lifecycle stages on financial ownership. Financial Counseling and Planning, 7, 21-30.
42. Yang, Y. (2004). Measuring risk preferences: Re-examination of Grable and Lytton's 13-item questionnaire. Consumer Interest Annual, 50, 119-122.
43. Yao, R., Gutter, M., & Hanna, S. (2005). The financial risk tolerance of Blacks, Hispanics and Whites. Financial Counseling and Planning, 16(1), 51-62.
44. Yuh, Y., & DeVaney, S. A. (1996). Determinants of couples' defined contribution retirement funds. Financial Counseling and Planning, 7, 31-38.
45. Zagorsky, J. L. (2005). Marriage and divorce's impact on wealth. Journal of Sociology, 41(4), 406.
46. Zhong, L. X., & Xiao, J. J. (1995). Determinants of family bond and stock holdings. Financial Counseling and Planning, 6, 107-114.