Evidence of Risk Aversion in the Health and Retirement Study

TitleEvidence of Risk Aversion in the Health and Retirement Study
Publication TypeReport
Year of Publication1999
AuthorsBajtelsmit, VL
InstitutionColorado State University
KeywordsNet Worth and Assets, Risk Taking, Women and Minorities

This study reviews the literature on individual risk aversion and investment allocation. Relative risk aversion is estimated using the 1994 wave of the Health and Retirement Study, a large nationally representative sample of households nearing retirement. After controlling for age, income, dependents, and other demographic characteristics, the results confirm earlier findings of decreasing relative risk aversion. Single women are found to be relatively more risk averse than married couples. Risky portfolio allocation is significantly lower for older households, for those with lower educational levels, and for black households, when housing is not included in the definition of wealth. Examination of the wealth accumulation in this sample of households indicates excessive levels of debt and insufficient savings are common. A smaller sample of individuals completed an experimental component of the survey designed to measure risk aversion with respect to gain or loss of income. The respondents self-professed risk aversion hasa positive impact on risky allocation but the significance level is low.

Endnote Keywords

Net Worth/Risk Aversion/Investments/Minorities

Endnote ID


Citation Key5388