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Risk Attitudes as an Independent Predictor of Debt

Author

Listed:
  • Michael Daly

    (UCD Geary Institute,University College Dublin and School of Psychology,Trinity College Dublin)

  • Liam Delaney

    (UCD Geary Institute,School of Economics and School of Public Health & Population Science,University College Dublin)

  • Séamus McManus

    (UCD Geary Institute,University College Dublin and School of Business & Economics,Maastricht University)

Abstract

This paper examines how attitudes to risk relate to other psychological constructs of personality and consideration of future consequences (a proxy for time preferences) and how risk attitudes relate to credit behaviour and debt holdings. There is a small correlation between risk attitudes and consideration of future consequences. As regards personality, risk attitudes are most positively related to extraversion and openness to experience and are negatively related to neuroticism. Risk willingness is a robust predictor of debt holdings even controlling for demographics, personality, consideration of future consequences and other covariates.

Suggested Citation

  • Michael Daly & Liam Delaney & Séamus McManus, 2010. "Risk Attitudes as an Independent Predictor of Debt," Working Papers 201049, Geary Institute, University College Dublin.
    • Handle: RePEc:ucd:wpaper:201049
    as

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    References listed on IDEAS

    as
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    Citations

    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Papers on Personality and Economics
      by Liam Delaney in Economics and Psychology Research on 2012-04-18 15:30:00

    Citations

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    Cited by:

    1. Hermansson, Cecilia, 2016. "Relationships between bank customers’ risk attitudes and their balance sheets," Working Paper Series 12/15, Royal Institute of Technology, Department of Real Estate and Construction Management & Banking and Finance.
    2. Kamil Filipek & Andrzej Cwynar & Wiktor Cwynar, 2019. "Does Social Capital Influence Debt Literacy? The Case of Facebook Users in Poland," Prague Economic Papers, Prague University of Economics and Business, vol. 2019(5), pages 567-588.
    3. Murong Yang & Laurence S. J. Roope & James Buchanan & Arthur E. Attema & Philip M. Clarke & A. Sarah Walker & Sarah Wordsworth, 2022. "Eliciting risk preferences that predict risky health behavior: A comparison of two approaches," Health Economics, John Wiley & Sons, Ltd., vol. 31(5), pages 836-858, May.
    4. repec:prg:jnlpep:v:preprint:id:721:p:1-22 is not listed on IDEAS
    5. Rendall, Stella & Brooks, Chris & Hillenbrand, Carola, 2021. "The impacts of emotions and personality on borrowers’ abilities to manage their debts," International Review of Financial Analysis, Elsevier, vol. 74(C).
    6. Delaney, Liam & Harmon, Colm & Ryan, Martin, 2013. "The role of noncognitive traits in undergraduate study behaviours," Economics of Education Review, Elsevier, vol. 32(C), pages 181-195.
    7. Xueqing Yang & Yang Liu & Mei Wang & Alberto Bezama & Daniela Thrän, 2021. "Identifying the Necessities of Regional-Based Analysis to Study Germany’s Biogas Production Development under Energy Transition," Land, MDPI, vol. 10(2), pages 1-20, February.

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    More about this item

    JEL classification:

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

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