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Risk Tolerance among National Longitudinal Survey of Youth Participants: The Effects of Age and Cognitive Skills

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  • Bidisha Mandal
  • Brian E. Roe

Abstract

type="main" xml:id="ecca12088-abs-0001"> We analyse how age and cognitive skills are related to risk tolerance among respondents to the National Longitudinal Survey of Youth between 1993 and 2006. Older individuals display lower risk tolerance than younger individuals, though as the panel ages from their early thirties to their mid-forties, differences in risk tolerance between the oldest and youngest individuals narrow, while panel-average risk tolerance declines. In contrast to other studies, we find that cognitive skill measured during respondents' teenage years is related to risk tolerance in a non-linear fashion, where respondents with the lowest and highest skills reveal the greatest risk tolerance.

Suggested Citation

  • Bidisha Mandal & Brian E. Roe, 2014. "Risk Tolerance among National Longitudinal Survey of Youth Participants: The Effects of Age and Cognitive Skills," Economica, London School of Economics and Political Science, vol. 81(323), pages 522-543, July.
    • Handle: RePEc:bla:econom:v:81:y:2014:i:323:p:522-543
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    File URL: http://hdl.handle.net/10.1111/ecca.2014.81.issue-323
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    Cited by:

    1. Daiane De Bortoli & Newton da Costa Jr. & Marco Goulart & Jéssica Campara, 2019. "Personality traits and investor profile analysis: A behavioral finance study," PLOS ONE, Public Library of Science, vol. 14(3), pages 1-18, March.
    2. Nicolas Eber & Patrick Roger & Tristan Roger, 2024. "Finance and intelligence: An overview of the literature," Journal of Economic Surveys, Wiley Blackwell, vol. 38(2), pages 503-554, April.
    3. Amador, Luis & Brañas-Garza, Pablo & Espín, Antonio M. & Garcia, Teresa & Hernández, Ana, 2019. "Consistent and inconsistent choices under uncertainty: The role of cognitive abilities," MPRA Paper 95178, University Library of Munich, Germany.
    4. Lau Lilleholt, 2019. "Cognitive ability and risk aversion: A systematic review and meta analysis," Judgment and Decision Making, Society for Judgment and Decision Making, vol. 14(3), pages 234-279, May.
    5. Barbara Alemanni & Pierpaolo Uberti, 2019. "What Are Investors Afraid of? Finding the Big Bad Wolf," IJFS, MDPI, vol. 7(3), pages 1-12, July.
    6. Xiaoxia Dong & Matthew DiScenna & Erick Guerra, 2019. "Transit user perceptions of driverless buses," Transportation, Springer, vol. 46(1), pages 35-50, February.
    7. Jim Engle-Warnick & Diego Pulido & Marine de Montaignac, 2016. "A Comparison of Survey and Incentivized-Based Risk Attitude Elicitation," CIRANO Working Papers 2016s-40, CIRANO.
    8. Arvindh Rajasekar & Arul Ramanatha Pillai & Rajesh Elangovan & Satyanarayana Parayitam, 2023. "Risk capacity and investment priority as moderators in the relationship between big-five personality factors and investment behavior: a conditional moderated moderated-mediation model," Quality & Quantity: International Journal of Methodology, Springer, vol. 57(3), pages 2091-2123, June.
    9. repec:cup:judgdm:v:14:y:2019:i:3:p:234-279 is not listed on IDEAS

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