Risk Tolerance among National Longitudinal Survey of Youth Participants: The Effects of Age and Cognitive Skills

Authors


Abstract

We analyse how age and cognitive skills are related to risk tolerance among respondents to the National Longitudinal Survey of Youth between 1993 and 2006. Older individuals display lower risk tolerance than younger individuals, though as the panel ages from their early thirties to their mid-forties, differences in risk tolerance between the oldest and youngest individuals narrow, while panel-average risk tolerance declines. In contrast to other studies, we find that cognitive skill measured during respondents' teenage years is related to risk tolerance in a non-linear fashion, where respondents with the lowest and highest skills reveal the greatest risk tolerance.

Ancillary