Retirement investor risk tolerance in tranquil and crisis periods: Experimental survey evidence

Bateman, H; Islam, T; Louviere, J; Satchell, S; Thorp, S

Retirement investor risk tolerance in tranquil and crisis periods: Experimental survey evidence

Bateman, H Islam, T Louviere, J

Satchell, S Thorp, S

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Publication Type:: Journal Article
Citation:: Journal of Behavioral Finance, 2011, 12 (4), pp. 201 - 218
Issue Date:: 2011-12-01

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Field	Value	Language
dc.contributor.author	Bateman, H	en_US
dc.contributor.author	Islam, T	en_US
dc.contributor.author	Louviere, J https://orcid.org/0000-0001-7688-164X	en_US
dc.contributor.author	Satchell, S	en_US
dc.contributor.author	Thorp, S https://orcid.org/0000-0003-3462-0876	en_US
dc.date.issued	2011-12-01	en_US
dc.identifier.citation	Journal of Behavioral Finance, 2011, 12 (4), pp. 201 - 218	en_US
dc.identifier.issn	1542-7560	en_US
dc.identifier.uri	http://hdl.handle.net/10453/17253
dc.description.abstract	We conduct a choice experiment to investigate the impact of the financial crisis of 2008 on retirement saver investment choice and risk aversion. Analysis of estimated individual risk parameters shows a small increase in mean risk aversion between the relatively tranquil period of early 2007 and the crisis conditions of late 2008. Investment preferences of survey respondents, estimated using the scale-adjusted version of a latent class choice model, also change during the crisis. We identify age and income as important determinants of preference classes in both surveys and age is also identified as a key determinant of variability (scale). Young and low income individuals make choices that are more consistent with standard mean- variance analysis, but older and higher income individuals react positively to both higher returns and increasing risk in returns. Overall we find a mild moderating of retirement investor risk tolerance in 2008. © The Institute of Behavioral Finance.	en_US
dc.relation.ispartof	Journal of Behavioral Finance	en_US
dc.relation.isbasedon	10.1080/15427560.2011.620199	en_US
dc.title	Retirement investor risk tolerance in tranquil and crisis periods: Experimental survey evidence	en_US
dc.type	Journal Article
utslib.citation.volume	4	en_US
utslib.citation.volume	12	en_US
utslib.for	1502 Banking, Finance and Investment	en_US
utslib.for	1501 Accounting, Auditing and Accountability	en_US
pubs.embargo.period	Not known	en_US
pubs.organisational-group	/University of Technology Sydney
pubs.organisational-group	/University of Technology Sydney/Faculty of Business
pubs.organisational-group	/University of Technology Sydney/Strength - CENSOC - Study of Choice
utslib.copyright.status	open_access
pubs.issue	4	en_US
pubs.publication-status	Published	en_US
pubs.volume	12	en_US

Abstract:

We conduct a choice experiment to investigate the impact of the financial crisis of 2008 on retirement saver investment choice and risk aversion. Analysis of estimated individual risk parameters shows a small increase in mean risk aversion between the relatively tranquil period of early 2007 and the crisis conditions of late 2008. Investment preferences of survey respondents, estimated using the scale-adjusted version of a latent class choice model, also change during the crisis. We identify age and income as important determinants of preference classes in both surveys and age is also identified as a key determinant of variability (scale). Young and low income individuals make choices that are more consistent with standard mean- variance analysis, but older and higher income individuals react positively to both higher returns and increasing risk in returns. Overall we find a mild moderating of retirement investor risk tolerance in 2008. © The Institute of Behavioral Finance.

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http://hdl.handle.net/10453/17253