An exploratory investigation of the relation between risk tolerance scores and demographic characteristics

This study examines the relationship between a psychometrically derived measure of subjective financial risk tolerance and a range of demographic characteristics that are widely used as a basis for heuristically derived estimates of investors' attitudes towards financial risk. The validity of widely used demographics such as gender, age, income and wealth as determinants of risk tolerance is supported, although the relationships found are not as simple as implied by the demographic heuristics. In particular, risk tolerance exhibits concavity in respect to income across all age groups and irrespective of gender. However, education, marital status and dependents, which have been found to be significant in previous studies, were not found to be significant determinants of an individual's attitude towards risk in this study.