Chapter

Risk Propensities

Gordon L. Clark, Kendra Strauss and Janelle Knox-Hayes

in Saving for Retirement

Published in print January 2012 | ISBN: 9780199600854
Published online May 2012 | e-ISBN: 9780191738104 | DOI: http://dx.doi.org/10.1093/acprof:oso/9780199600854.003.0003
Risk Propensities

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In this chapter we test whether it matters if people are young or old, male or female, and with a spouse or not for individual risk assessment. Using a set of questions designed to elicit respondents’ intentions with regard to risk and uncertainty, we find that risk predisposition and behavior are correlated with socio-demographic status and income, and that having a partner with a pension entitlement makes a difference to risk propensity, all other things being equal. We also find that low-income, single women are highly risk averse and appear to discount any future perspective. In effect, social identity and relationships are correlated with individual risk-management strategies: some people make plans for the future based upon their intimate relationships with others. Finally, we find that respondents’ savings intentions are shaped by their immediate relationships with others, and are therefore “local” albeit with two possible effects, positive and negative.

Keywords: risk preferences; socio-demographic status

Chapter.  8993 words.  Illustrated.

Subjects: Pensions

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