International Journal of Economics, Finance and Management Sciences

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Determinants of Risk Tolerance

Received: 21 February 2014    Accepted:     Published: 30 March 2014
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Abstract

Risk aversion is an important factor in explaining many everyday decisions. Thus, one asks which determinants can explain different attitudes towards risk. Several studies show different risk attitudes with respect to gender, age, income, and wealth (e.g. [19]). While these findings are hardly controversial, there is still some uncertainty about the effect of culture on risk tolerance. Thus, the main issue of this survey is to elaborate possible differences in risk preferences that are caused by cultural background. The main question in this context is whether religion or nationality are of importance for explaining risk attitudes. For this purpose, this study employs the German Socio-Economic Panel (GSOEP) to figure out differences in risk attitudes. Another contribution of this article is that is uses a generalized ordered logit model while others use simple linear regression models or simple logit or probit models which are not efficient. The estimations show that the cultural background does indeed have some impact on risk taking behaviour.

DOI 10.11648/j.ijefm.20140202.15
Published in International Journal of Economics, Finance and Management Sciences (Volume 2, Issue 2, April 2014)
Page(s) 143-152
Creative Commons

This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.

Copyright

Copyright © The Author(s), 2024. Published by Science Publishing Group

Keywords

Risk Tolerance, Cultural Background, Generalized Ordered Logit Model, Nationality, Religion

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Author Information
  • Institute of Economics, University of Erlangen-Nuremberg, Germany

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  • APA Style

    Christoph S. Weber. (2014). Determinants of Risk Tolerance. International Journal of Economics, Finance and Management Sciences, 2(2), 143-152. https://doi.org/10.11648/j.ijefm.20140202.15

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    Christoph S. Weber. Determinants of Risk Tolerance. Int. J. Econ. Finance Manag. Sci. 2014, 2(2), 143-152. doi: 10.11648/j.ijefm.20140202.15

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    Christoph S. Weber. Determinants of Risk Tolerance. Int J Econ Finance Manag Sci. 2014;2(2):143-152. doi: 10.11648/j.ijefm.20140202.15

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  • @article{10.11648/j.ijefm.20140202.15,
      author = {Christoph S. Weber},
      title = {Determinants of Risk Tolerance},
      journal = {International Journal of Economics, Finance and Management Sciences},
      volume = {2},
      number = {2},
      pages = {143-152},
      doi = {10.11648/j.ijefm.20140202.15},
      url = {https://doi.org/10.11648/j.ijefm.20140202.15},
      eprint = {https://download.sciencepg.com/pdf/10.11648.j.ijefm.20140202.15},
      abstract = {Risk aversion is an important factor in explaining many everyday decisions. Thus, one asks which determinants can explain different attitudes towards risk. Several studies show different risk attitudes with respect to gender, age, income, and wealth (e.g. [19]). While these findings are hardly controversial, there is still some uncertainty about the effect of culture on risk tolerance. Thus, the main issue of this survey is to elaborate possible differences in risk preferences that are caused by cultural background. The main question in this context is whether religion or nationality are of importance for explaining risk attitudes. For this purpose, this study employs the German Socio-Economic Panel (GSOEP) to figure out differences in risk attitudes. Another contribution of this article is that is uses a generalized ordered logit model while others use simple linear regression models or simple logit or probit models which are not efficient. The estimations show that the cultural background does indeed have some impact on risk taking behaviour.},
     year = {2014}
    }
    

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    AB  - Risk aversion is an important factor in explaining many everyday decisions. Thus, one asks which determinants can explain different attitudes towards risk. Several studies show different risk attitudes with respect to gender, age, income, and wealth (e.g. [19]). While these findings are hardly controversial, there is still some uncertainty about the effect of culture on risk tolerance. Thus, the main issue of this survey is to elaborate possible differences in risk preferences that are caused by cultural background. The main question in this context is whether religion or nationality are of importance for explaining risk attitudes. For this purpose, this study employs the German Socio-Economic Panel (GSOEP) to figure out differences in risk attitudes. Another contribution of this article is that is uses a generalized ordered logit model while others use simple linear regression models or simple logit or probit models which are not efficient. The estimations show that the cultural background does indeed have some impact on risk taking behaviour.
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