Grable & Lytton

Grable, J. E. & Lytton, R. H. (2001). Assessing
the concurrent validity of the of the SCF
Risk Tolerance Question. Financial Counseling and Planning, 12(2), 43-52.

Assessing
the Concurrent Validity of the SCF
Risk Tolerance Question

John
E. Grable¹and Ruth
H. Lytton²

The
Survey of Consumer Finances (SCF) offers researchers one of the most popular
sources of data for the study of financial risk tolerance. This paper reports
findings from two studies that were designed to test the concurrent validity
of the SCF financial risk tolerance assessment question. Comparisons between
the commonly used one-item SCF assessment measure and a 13-item risk-tolerance
assessment index were undertaken. Results of the concurrent validity analyses
suggest that the SCF question does not represent the full spectrum of financial
risk tolerance, but might reflect investment choice attitudes or experience.

Key words: Survey of Consumer
Finances, Risk tolerance, Validity

1.
John E. Grable, Assistant Professor, 318 Justin Hall, Family Studies and
Human Services, College of Human Ecology, Kansas State University, Manhattan,
KS 66506, Phone: 785-532-1486, Fax: 785-532-5505, E-Mail: grable@humec.ksu.edu

2. 
Ruth H. Lytton, Associate Professor, 101 Wallace Hall, Virginia Tech, Blacksburg,
VA 24061, Phone: 540- 231-6678, Fax: 540-231-3250, E-Mail: rlytton@mail.vt.edu

A
version of this article was published in Grable & Lytton (1999a). It
received the 1999 AFCPE best conference paper award.