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Financial and non-financial risk attitudes: What does it matter?

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  • Colasante, Annarita
  • Riccetti, Luca

Abstract

In this paper we try to: (i) study the personal features of the subjects that can influence the risk attitude in financial and non-financial contexts, (ii) understand the correspondences among some behaviors in financial and non-financial choices. We start from the questionnaire used by Colasante and Riccetti (2020), that investigates how subjects take into account the first four moments of the return distribution in making risky decisions, and that collects data from a very large and heterogeneous population. We find that age and geographical location are important determinants of risk propensity in all domains. Moreover, we find that risk attitudes in financial and non-financial contexts are correlated, but correlation is far from 1, with a larger risk aversion in non-financial contexts. Therefore, there is a common underlying risk trait, but the context is also relevant. Interestingly, the financial risk propensity is positively correlated to the propensity to perform illegal activities.

Suggested Citation

  • Colasante, Annarita & Riccetti, Luca, 2021. "Financial and non-financial risk attitudes: What does it matter?," Journal of Behavioral and Experimental Finance, Elsevier, vol. 30(C).
    • Handle: RePEc:eee:beexfi:v:30:y:2021:i:c:s2214635021000381
    DOI: 10.1016/j.jbef.2021.100494
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    More about this item

    Keywords

    Experiment; Demographics; Choice under uncertainty; Risk aversion; Behavioral finance; Moments of return distribution;
    All these keywords.

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • D90 - Microeconomics - - Micro-Based Behavioral Economics - - - General
    • G40 - Financial Economics - - Behavioral Finance - - - General

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