A test of traditional and psychometric relative risk tolerance measures on household financial risk taking

John E. Grable; Angela C. Lyons; Wookjae Heo

doi:10.1016/j.frl.2019.03.012

A test of traditional and psychometric relative risk tolerance measures on household financial risk taking

John E. Grable, Angela C. Lyons, Wookjae Heo

Research output: Contribution to journal › Article › peer-review

Abstract

This article provides a comparative test of two ways in which individual relative risk tolerance is commonly measured in research and practice. Results suggest that the popular method of measuring gambles across lifetime income provides less insight into household investment behavior than the psychometric approach that is often used to derive a risk profile measure.

Original language	English (US)
Pages (from-to)	8-13
Number of pages	6
Journal	Finance Research Letters
Volume	30
DOIs	https://doi.org/10.1016/j.frl.2019.03.012
State	Published - Sep 2019

Keywords

Income gambles
Psychometric assessment
Risk aversion
Risk tolerance

ASJC Scopus subject areas

Finance

Online availability

10.1016/j.frl.2019.03.012

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title = "A test of traditional and psychometric relative risk tolerance measures on household financial risk taking",

abstract = "This article provides a comparative test of two ways in which individual relative risk tolerance is commonly measured in research and practice. Results suggest that the popular method of measuring gambles across lifetime income provides less insight into household investment behavior than the psychometric approach that is often used to derive a risk profile measure.",

keywords = "Income gambles, Psychometric assessment, Risk aversion, Risk tolerance",

author = "Grable, {John E.} and Lyons, {Angela C.} and Wookjae Heo",

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year = "2019",

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A test of traditional and psychometric relative risk tolerance measures on household financial risk taking

Abstract

Keywords

ASJC Scopus subject areas

Online availability

Library availability

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