Predicting Financial Risk Tolerance and Risk-Taking Behaviour: A Comparison of Questionnaires and Tests

	Range	Mean	S.D.	Barsky Corr.	H&L Corr.	Propensity Corr.	Self-Rated Risk Tolerance Corr.	SCF Risk Item Corr.
Barsky	1 – 4	2.20	0.88	1.00
H&L	1 – 7	4.21	1.30	0.26**	1.00
Propensity	13 - 44	26.10	4.66	0.21**	0.28**	1.00
Self-Rated RT	1 – 10	4.11	2.19	0.18*	0.18**	0.42**	1.00
SCF Risk Item	1 – 4	1.58	0.50	0.17*	0.14	0.44**	0.44**	1.00

1 Note: *p < .05

1** p < .01

Table 2:

Descriptive and correlational data for the knowledge, likelihood, and experience items

	Mean	S.D.	Barsky Corr.	H&L Corr.	Propensity Corr.
Casino Knowledge	4.13	2.63	0.11	0.10	0.26**
Gambling Likelihood	2.25	2.14	0.08	0.01	0.18**
Financial Decision Experience	5.70	2.22	0.16*	0.05	0.12*
Investing Knowledge	4.71	2.46	0.15*	0.17*	0.34**

1 Note: *p < .05

1** p < .01

Table 3:

Descriptive and correlational data for asset allocation items

	Mean	S.D.	Barsky Corr.	H&L Corr.	Propensity Corr.
Cash Assets	68.47	36.13	-0.01	-0.12	-0.23**
Fixed-Income	4.33	9.01	-0.05	0.01	0.07
Equities	16.99	27.58	0.01	0.08	0.20**
Business Ownership	2.53	9.90	0.01	-0.01	0.07
Real Estate	2.64	9.40	-0.03	-0.01	0.11
Hard Assets	5.07	13.39	0.05	0.05	0.14*

1 Note: *p < .05

1** p < .01

Table 4:

Descriptive and correlational data for demographic items

	Mean	S.D.	Barsky Corr.	H&L Corr.	Propensity Corr.
Gender (1 = Male; 2 =Female)	1.60	0.49	-0.15	-0.15	-0.13
Age	25.94	6.48	0.06	0.05	-0.00
Personal Income	2.98	2.40	-0.01	0.01	0.04
Household Income	4.95	3.62	-0.06	0.03	0.08
Education	4.87	1.06	-0.04	-0.06	-0.00

1 Note: *p < .05 **p < .01

Table 5:

Estimates of risk-taking by risk tolerance score

Would You Like to Participate in the Game?

Barsky M SD S.E. Mean

H&L M SD S.E. Mean

Propensity M SD S.E. Mean

Yes

2.26

0.90

0.17

4.22

1.48

0.28

26.52

5.13

0.99

2.08

0.64

0.18

4.15

1.07

0.30

22.92

3.71

1.03

t Test

t₃₈ = 0.65, p = .52

t₃₈ = 0.15, p = .88

t₃₈ = 2.26*, p = .03

Table 6:

Predictions of risk-taking by risk tolerance score

	N	Barsky M SD S.E. Mean	H&L M SD S.E. Mean	Propensity M SD S.E. Mean
No Gamble	13	2.15 0.69 0.19	4.15 1.07 0.30	22.85 3.72 1.03
$US10 Gamble	8	2.25 0.89 0.31	4.00 1.85 0.65	23.88 4.82 1.71
$US20 Gamble	19	2.21 0.92 0.21	4.32 1.34 0.31	27.69 4.90 1.12
F Test		F₃₇ = 0.04, p = .97	F₃₇ = 0.30, p = .85	F₃₇ = 4.94**, p = .01

References

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Articles in this issue

DOI: https://doi.org/10.2478/fprj-2020-0002 | Journal eISSN: 2206-1355 | Journal ISSN: 2206-1347

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Language: English

Page range: 21 - 39

Submitted on: Mar 24, 2020

Accepted on: Sep 19, 2020

Published on: Mar 19, 2024

Published by: Financial Advice Association of Australia

In partnership with: Paradigm Publishing Services

Publication frequency: 2 issues per year

Keywords:

classical test theory,

psychometrics

Related subjects:

Business and economics,

Political economics,

Economic theory, systems and structures,

Business management,

Business management, other,

Industries,

Banks, financial service provider, insurers

© 2024 John E. Grable, Amy Hubble, Michelle Kruger, Melissa Visbal, published by Financial Advice Association of Australia
This work is licensed under the Creative Commons Attribution 4.0 License.

Volume 6 (2020): Issue 1 (December 2020)