IDEAS home Printed from https://ideas.repec.org/a/pal/jofsma/v26y2021i1d10.1057_s41264-020-00078-6.html
   My bibliography  Save this article

Characteristics of random responders in a financial risk-tolerance questionnaire

Author

Listed:
  • John E. Grable

    (University of Georgia)

  • Wookjae Heo

    (South Dakota State University)

  • Abed Rabbani

    (University of Missouri)

Abstract

The possibility of random response occurring, which can result in Type II errors, is possible whenever a financial risk-tolerance questionnaire is administered. This study was designed to apply inter-item standard deviation (ISD) scores, as introduced by Marjanovic, Holden, Struthers, Cribbie, and Greenglass (2015), to identify responders to a financial risk-tolerance questionnaire as hyper-consistent, conscientious, or random. Hyper-consistent responders were found to be more likely to be older married men who make their own financial and investment decisions. Those classified as hyper-consistent exhibited the lowest risk-tolerance scores. Conscientious responders were more likely to report having a high level of attained education and to rely on someone else when making financial and investment decisions. Financial risk-tolerance scores for conscientious responders fell between scores for hyper-consistent and random responders. Random responders were found to be younger, single, less well educated, and more likely to hold cash in their portfolio. Random responders also exhibited the highest financial risk-tolerance scores among participants in this study.

Suggested Citation

  • John E. Grable & Wookjae Heo & Abed Rabbani, 2021. "Characteristics of random responders in a financial risk-tolerance questionnaire," Journal of Financial Services Marketing, Palgrave Macmillan, vol. 26(1), pages 1-9, March.
    • Handle: RePEc:pal:jofsma:v:26:y:2021:i:1:d:10.1057_s41264-020-00078-6
    DOI: 10.1057/s41264-020-00078-6
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1057/s41264-020-00078-6
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1057/s41264-020-00078-6?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Grable, John & Lytton, Ruth H., 1999. "Financial risk tolerance revisited: the development of a risk assessment instrument," Financial Services Review, Elsevier, vol. 8(3), pages 163-181.
    2. Grable, John E. & Lyons, Angela C. & Heo, Wookjae, 2019. "A test of traditional and psychometric relative risk tolerance measures on household financial risk taking," Finance Research Letters, Elsevier, vol. 30(C), pages 8-13.
    3. Raquel Fonseca & Kathleen J. Mullen & Gema Zamarro & Julie Zissimopoulos, 2012. "What Explains the Gender Gap in Financial Literacy? The Role of Household Decision Making," Journal of Consumer Affairs, Wiley Blackwell, vol. 46(1), pages 90-106, March.
    4. Ho, Kwok & Milevsky, Moshe Arye & Robinson, Chris, 1994. "Asset allocation, life expectancy and shortfall," Financial Services Review, Elsevier, vol. 3(2), pages 109-126.
    5. Jürg Hari & Elisabeth Pirsch & Heike Rawitzer, 2018. "Women are scaredy-cats and men are conquerors?," Journal of Financial Services Marketing, Palgrave Macmillan, vol. 23(2), pages 128-139, June.
    6. Zdravko Marjanovic & C. Ward Struthers & Robert Cribbie & Esther R. Greenglass, 2014. "The Conscientious Responders Scale," SAGE Open, , vol. 4(3), pages 21582440145, July.
    7. Courtney Droms Hatch & Kurt Carlson & William G. Droms, 2018. "Effects of market returns and market volatility on investor risk tolerance," Journal of Financial Services Marketing, Palgrave Macmillan, vol. 23(2), pages 77-90, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Ritika & Himanshu & Nawal Kishor, 2023. "Modeling of factors affecting investment behavior during the pandemic: a grey-DEMATEL approach," Journal of Financial Services Marketing, Palgrave Macmillan, vol. 28(2), pages 222-235, June.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Wookjae Heo & Abed G. Rabbani & Jae Min Lee, 2021. "Mediation between financial risk tolerance and equity ownership: assessing the role of financial knowledge underconfidence," Journal of Financial Services Marketing, Palgrave Macmillan, vol. 26(3), pages 169-180, September.
    2. Pragati Hemrajani & Rajni & Rahul Dhiman, 2024. "Retail Investors’ Financial Risk Tolerance and Risk-taking Behaviour: The Role of Psychological Factors," FIIB Business Review, , vol. 13(1), pages 87-105, January.
    3. Wookjae Heo & John E. Grable & Abed G. Rabbani, 2020. "A test of the association between the initial surge in COVID-19 cases and subsequent changes in financial risk tolerance," Review of Behavioral Finance, Emerald Group Publishing Limited, vol. 13(1), pages 3-19, August.
    4. Kong, Hyeongwoo & Yun, Wonje & Kim, Woo Chang, 2023. "Tracking customer risk aversion," Finance Research Letters, Elsevier, vol. 54(C).
    5. Shakira MUKHTAR & Anisa JAN, 2023. "Decoding financial literacy's mediating role: analyzing the influence of biopsychosocial indicators on financial satisfaction and risk tolerance among millennial investors," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania / Editura Economica, vol. 0(4(637), W), pages 219-242, Winter.
    6. Mukhtar Shakira & Jan Anisa & Zahoor Adil, 2023. "Beyond the Big Five: How Dynamic Personality Traits Predict Financial Risk Tolerance?," Acta Universitatis Sapientiae, Economics and Business, Sciendo, vol. 11(1), pages 93-114, October.
    7. Rabbani, Abed G. & Grable, John E., 2022. "Can portfolio risk be described with estimates of financial risk tolerance calibration?," Finance Research Letters, Elsevier, vol. 46(PB).
    8. Liana Holanda N. Nobre & John E. Grable & Wesley Vieira da Silva & Claudimar Pereira da Veiga, 2016. "A Cross Cultural Test of Financial Risk Tolerance Attitudes: Brazilian and American Similarities and Differences," International Journal of Economics and Financial Issues, Econjournals, vol. 6(1), pages 314-322.
    9. Heo, Wookjae & Rabbani, Abed & Grable, John E., 2021. "An Evaluation of the Effect of the COVID-19 Pandemic on the Risk Tolerance of Financial Decision Makers," Finance Research Letters, Elsevier, vol. 41(C).
    10. Rabbani, Abed G. & Yao, Zheying & Wang, Christina, 2019. "Does personality predict financial risk tolerance of pre-retiree baby boomers?," Journal of Behavioral and Experimental Finance, Elsevier, vol. 23(C), pages 124-132.
    11. Fisher, Patti J. & Yao, Rui, 2017. "Gender differences in financial risk tolerance," Journal of Economic Psychology, Elsevier, vol. 61(C), pages 191-202.
    12. Kiliyanni, Abdul Latheef & Sivaraman, Sunitha, 2016. "The perception-reality gap in financial literacy: Evidence from the most literate state in India," International Review of Economics Education, Elsevier, vol. 23(C), pages 47-64.
    13. Yao, Zheying & Rabbani, Abed G., 2021. "Association between investment risk tolerance and portfolio risk: The role of confidence level," Journal of Behavioral and Experimental Finance, Elsevier, vol. 30(C).
    14. Justus Blaschke, 2022. "Gender differences in financial literacy among teenagers - Can confidence bridge the gap?," Cogent Economics & Finance, Taylor & Francis Journals, vol. 10(1), pages 2144328-214, December.
    15. Niculaescu, Corina E. & Sangiorgi, Ivan & Bell, Adrian R., 2023. "Does personal experience with COVID-19 impact investment decisions? Evidence from a survey of US retail investors," International Review of Financial Analysis, Elsevier, vol. 88(C).
    16. TAVARES Fernando Oliveira & ALMEIDA Luís Gomes & SOARES Vasco Jorge & TAVARES Vasco Capela, 2022. "Financial literacy: an exploratory analysis in Portugal," Studies in Business and Economics, Lucian Blaga University of Sibiu, Faculty of Economic Sciences, vol. 17(2), pages 252-269, August.
    17. Kamer Karakurum-Ozdemir & Melike Kokkizil & Gokce Uysal, 2019. "Financial Literacy in Developing Countries," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 143(1), pages 325-353, May.
    18. Wookjae Heo & John E. Grable & Barbara O’Neill, 2017. "Wealth Accumulation Inequality: Does Investment Risk Tolerance and Equity Ownership Drive Wealth Accumulation?," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 133(1), pages 209-225, August.
    19. Carlos Santiago Guzmán Gutiérrez, 2019. "Sistema Pensional Colombiano: implicaciones de la educación financiera sobre las decisiones de traslado de los individuos," Documentos CEDE 17677, Universidad de los Andes, Facultad de Economía, CEDE.
    20. Alfonso Arellano & Noelia Camara & David Tuesta, 2014. "El efecto de la autoconfianza en el conocimiento financiero," Working Papers 1427, BBVA Bank, Economic Research Department.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pal:jofsma:v:26:y:2021:i:1:d:10.1057_s41264-020-00078-6. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.palgrave.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.