Yao, Gutter, Hanna, 2005(1), Financial risk tolerance of Blacks, Hispanics, and Whites

Financial
Counseling and Planning

The Journal of the Association for Financial
Counseling and
Planning Education

Volume 16 (1), 2005

The
Financial Risk Tolerance of Blacks, Hispanics and
Whites

Rui Yao[1], Michael
S. Gutter[2]
,
and
Sherman D.
Hanna[3]


This article focuses on the
effect of race and ethnicity on financial risk tolerance. Blacks and
Hispanics
are less likely to be willing to take some financial risk but more
likely to be
willing to take substantial financial risk than Whites, after
controlling for
the effects of other variables. Risk attitudes may affect investment
behavior,
so having an appropriate willingness to take financial risk is
important in
achieving investment goals. Government agencies and financial educators
should
target investor education on investments and financial risk to racial
and
ethnic groups in order to promote better choices for investing for
financial goals.

Keywords: Financial Risk
tolerance; Race; Ethnicity; Preferences; Survey of Consumer Finances 


[1]
Rui Yao, Assistant Professor, South
Dakota State
University, Department of Human Development, Consumer and Family
Sciences, NFA
311, Box 2275A, Brookings, SD 57007. Phone: 605-688-5009.  
Fax: 605-688-4888.  E-mail:
rui_yao@yahoo.com

[2]
Michael S. Gutter, Assistant Professor,
University of
Wisconsin-Madison, Department of Consumer Science, 1300 Linden Dr,
Madison, WI
53706. Phone: 608-262-5498.   Fax:
608-265-6048. Email: msgutter@wisc.edu

[3]
Sherman D. Hanna, Professor, Consumer
Sciences
Department, The OhioStateUniversity,

1787 Neil Avenue,
Columbus, OH43210

.  E-mail: hanna.1@osu.edu


The authors thank
Suzanne Lindamood for valuable insights for a variety of issues related
to the
Survey of Consumer Finances datasets.