A Test of Traditional and Psychometric Relative Risk Tolerance Measures on Household Financial Risk Taking
This article provides a comparative test of two ways in which individual relative risk tolerance is commonly measured in research and practice. Results suggest that the popular method of measuring gambles across lifetime income provides less insight into household investment behavior than the psychometric approach that is often used to derive a risk profile measure.
Finance Research Letters
Grable, John E.; Lyons, Angela C.; and Heo, Wookjae, "A Test of Traditional and Psychometric Relative Risk Tolerance Measures on Household Financial Risk Taking" (2019). Consumer Sciences Faculty Publications. 33.