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Subjective risk tolerance and numeracy skills: A study in Brazil

Author

Listed:
  • Campara, Jéssica Pulino
  • Paraboni, Ana Luiza
  • da Costa, Newton
  • Saurin, Valter
  • Lopes, Ana

Abstract

This study is an attempt to identify the influence of numeracy skills on subjective risk tolerance in a group of Brazilian university students (n=308). The primary findings describe a sample with a high level of numeracy skills and medium risk tolerance. It was observed that higher levels of numeracy skills do not correspond to a greater risk tolerance, probably because numeracy skills make people more cautious by giving them insight into the true risks to which they would be exposing themselves. This result was reinforced by a logistic regression analysis, which indicated that lower levels of numeracy were linked with greater predisposition to risk. Also, additional findings were that women had a lower risk tolerance, irrespective of numeracy skills, and that the exposition to financial education courses did not impact on risk behavior.

Suggested Citation

  • Campara, Jéssica Pulino & Paraboni, Ana Luiza & da Costa, Newton & Saurin, Valter & Lopes, Ana, 2017. "Subjective risk tolerance and numeracy skills: A study in Brazil," Journal of Behavioral and Experimental Finance, Elsevier, vol. 14(C), pages 39-46.
    • Handle: RePEc:eee:beexfi:v:14:y:2017:i:c:p:39-46
    DOI: 10.1016/j.jbef.2017.04.001
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    More about this item

    Keywords

    Numeracy; Risk tolerance; Risk aversion;
    All these keywords.

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • G2 - Financial Economics - - Financial Institutions and Services

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