Sex, gender and cognitive ability to financial risk preferences, fact of fiction?
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It is known that financial risk preferences are determined by being a man or a woman. But do other aspects also play a role? This report studies the role of sex, gender (being masculine or feminine) and cognitive ability to financial risk preferences, whether individuals make risky investments and the amount of risky investments. Men are considered as being risk taking and women are considered as being risk averse. Moreover, masculine individuals are willing to take more risks, in comparison with feminine individuals. Lastly, cognitive ability has a positive effect to risk taking. Therefore, it is hypothesized that men who are masculine and have high cognitive skills are willing to take more risks. This study focuses on the population of the Netherlands and uses data of the DNB Household Survey in 2017. We find a positive effect on financial risk preferences, regarding sex, gender and cognitive ability. However, the interaction terms between sex and gender and sex, gender and cognitive ability on the relationship to financial risk preferences are not economically significant. Furthermore, we find that the amount invested in risky assets as a fraction of net worth is economically significant determined by risk taking, femininity and cognitive ability.
Faculteit der Managementwetenschappen