We find that single women exhibit relatively more risk aversion in financial decision making than single men. Using U.S. sample data, we examine household holdings of risky assets to determine whether there are gender differences in f inancial risk taking. As wealth increases, the proportion of wealth held as risky assets is estimated to increase by a smaller amount for single women than for single men. Gender dgerences in financial risk taking are also influenced by age, race, and number of children. Greater financial risk aversion may provide an explanation for women's lower levels of wealth compared with men k. (JEL 516, D81, (311) *
Racial differences in the receipt offinancial inheritances he& to explain why the average difference in wealth between black and white households is larger than the average difference in income. Using data from a panel of prime-aged malesand from a representative survey of the U.S. population, we document the greater likelihood of white households receiving an inheritance than black households. Controlling for other factors which contribute to racial differences in wealth, we estimate that financial inheritances may account for between 10% and 20% of the average diflerence in black-white household wealth. (JEL D3 1)
This study decomposes the effects of chronological age, birth cohort, and calendar year on the age profile of household financial risk taking. Using two measures of risk taking, one based on observed portfolio allocations of wealth and another based on survey respondents' stated willingness to take risk, the results support the conventional wisdom that risk taking decreases with age. The results also reveal a cohort effect that shifts the age‐risk profile down from older to younger cohorts. This finding is consistent with households taking less risk in response to decreasing financial security over time. The results have implications for the impact of an aging population on stock prices and for the impact on household well‐being of the trend toward individual responsibility for asset management in vehicles such as defined‐contribution pensions and the proposed Social Security personal accounts.
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