The Influence of Political Orientation on Financial Risk Taking

Moore, Jeremy; Felton, James; Wright, Colbrin

doi:10.1108/19355181201000003

Cited by 8 publications

(8 citation statements)

References 7 publications

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“…Choma et al (2014) examine five domains (financial, recreational, ethical, social, and health) and find that risk seeking is higher among conservatives than among liberals in the financial domain; specifically, conservatives are more likely to choose the riskier option with a higher expected return than liberals. Moore, Felton, and Wright (2010) also find that conservatives are more risk seeking in the financial domain. However, other studies show no difference in financial risk taking between liberals and conservatives (Morris, Carranza, and Fox 2008).…”

Section: Literature Review and Hypothesis Developmentmentioning

confidence: 80%

“…However, the link between political identity and financial risk taking among individuals is less clear and beset with contradictory findings. Some studies have shown that conservatives are more risk seeking than liberals with respect to investing in mutual funds and new business ventures (Choma et al 2014; Moore, Felton, and Wright 2010), while another study found no differences between Republicans and Democrats in their choice of risky financial options (Morris, Carranza, and Fox 2008). These mixed findings suggest the need to understand the moderated nature of the association between political identity and financial risk taking.…”

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confidence: 99%

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Political Identity and Financial Risk Taking: Insights from Social Dominance Orientation

Han¹,

Jung²,

Mittal³

et al. 2019

Journal of Marketing Research

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This article investigates how people’s political identity is associated with their financial risk taking. The authors argue that conservatives’ financial risk taking increases as their self-efficacy increases because of their greater social dominance orientation, whereas liberals’ financial risk taking is invariant to their self-efficacy. This central hypothesis is verified in six studies using different measures of political identity, self-efficacy, and financial risk taking. The studies also use different samples of U.S. consumers, including online panels, a large-scale data set spanning five election cycles, and a secondary data set of political donations made by managers at companies. Finally, the authors articulate and demonstrate the mediating effect of individuals’ focus on the upside potential of a decision among conservatives but not liberals.

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Section: Literature Review and Hypothesis Developmentmentioning

confidence: 80%

mentioning

confidence: 99%

Political Identity and Financial Risk Taking: Insights from Social Dominance Orientation

Han¹,

Jung²,

Mittal³

et al. 2019

Journal of Marketing Research

View full text Add to dashboard Cite

show abstract

“…Furthermore, recent studies using simulated stock markets and real-world investment portfolios have demonstrated that liberals are less likely to participate in the stock market (Han, Jung, Mittal, Zyung, & Adam, 2019;Kaustia & Torstila, 2011;Moore, Felton, & Wright, 2010), because they perceive the stock market to be a more dangerous and risky place to invest money than conservatives (Fiagbenu & Kessler, 2019). These findings reveal that conservatives may not be generally risk-averse than liberals as they report higher risk propensity in the financial domain.…”

Section: Introductionmentioning

confidence: 99%

Of deadly beans and risky stocks: Political ideology and attitude formation via exploration depend on the nature of the attitude stimuli

Fiagbenu

Proch

Kessler

2019

British J of Psychology

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An attitude formation task examined how conservatives and liberals explore information about novel stimuli and form attitudes towards them. When framed as the BeanFest game, conservatives sampled fewer beans and exhibited a stronger learning asymmetry (i.e., better learning for negative than positive beans) than liberals. This has been taken as strong evidence that conservatives are more sensitive to negative stimuli than liberals. We argue that the learning asymmetry and sampling bias by conservatives is due to framing of the game. In addition to the BeanFest, we framed the game as StockFest (i.e., a stock market game) where participants learned about novel stocks. We replicated the pronounced learning asymmetry for conservatives in the BeanFest game, but found a pronounced learning asymmetry for liberals in the StockFest game. We suggest that conservatives and liberals are equally sensitive to negative stimuli but in different domains.

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“…In contrast, liberals also engage in behaviors which may help to minimize economic threats. Liberals are more cautious and intolerant of financial uncertainties in real and hypothetical stock market games and also form more negative attitudes towards stocks than conservatives (Fiagbenu et al, 2021a; Kaustia & Torstila, 2011; Moore et al, 2010). Although there appears to the an ideological asymmetry in stock ownership, the effect sizes are, however, small or insignificant, ( r = .01–.20); and the relationship is moderated by financial self‐efficacy (Han et al, 2019).…”

Section: Similar Psychological Processes But Distinct Psychological C...mentioning

confidence: 99%

“…Prior self‐report and laboratory studies suggest that liberals hold more negative attitudes towards stocks and trade less in hypothetical stock markets than conservatives (Choma et al, 2013; Fiagbenu et al, 2021a; Moore et al, 2010). However, we consistently found nonsignificant direct effects (but significant indirect effects) of political ideology on stock ownership.…”

Section: Studymentioning

confidence: 99%

Fear and Loathing of Wall Street: Political Liberalism, Uncertainty, and Threat Management in a Dangerous Economic World

Fiagbenu

Kessler

2022

Political Psychology

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Conservatives perceive the world as a more dangerous and threatening place than liberals, which explains conservatives' more cautious social behaviors and their greater support for policies (e.g., anti-immigration and harsher punitive measures) that aim to manage and reduce perceived threats and uncertainties. However, past research operationalized the "world" as a place replete with social and physical threats (e.g., street crimes and terrorism). Less attention has been given to the economic world, which is equally characterized by threatening events (e.g., corporate crimes, stock market crashes). In four studies, we examined whether differences in appraisal of the economic world explain ideological differences in stock market participation and neoliberal economic policy preferences. The findings reveal that liberals perceive the stock market as a more dangerous and riskier place than conservatives. This asymmetry explains liberals' cautious investment behaviors, their greater support for regulation of the stock market, and their greater opposition to privatization of Social Security. We argue that liberals' greater support for these policies serves to protect investors and the general public from the perceived harms of the economic world. Our findings suggest that the psychological processes underlying threat management and uncertainty reduction are similar for conservatives and liberals, but these processes are context dependent.

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The Influence of Political Orientation on Financial Risk Taking

Cited by 8 publications

References 7 publications

Political Identity and Financial Risk Taking: Insights from Social Dominance Orientation

Political Identity and Financial Risk Taking: Insights from Social Dominance Orientation

Of deadly beans and risky stocks: Political ideology and attitude formation via exploration depend on the nature of the attitude stimuli

Fear and Loathing of Wall Street: Political Liberalism, Uncertainty, and Threat Management in a Dangerous Economic World

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