HUMAN CAPITAL AND LIFE‐CYCLE EFFECTS ON RISK AVERSION

This paper provides additional evidence on life‐cycle patterns of relative risk aversion, using spline functions generated on Consumer Expenditure Survey data. Human capital is hypothesized to affect relative risk aversion; age has been used in previous work as a proxy for human capital. The objecti...

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Bibliographic Details
Published in:The Journal of financial research 1986, Vol.9 (1), p.41-51
Main Authors: Bellante, Don, Saba, Richard P.
Format: Article
Language:English
Subjects:
Consumer spending
Financial
Human capital
Life cycles
Risk aversion
Statistical analysis
Studies
Theory
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Summary:This paper provides additional evidence on life‐cycle patterns of relative risk aversion, using spline functions generated on Consumer Expenditure Survey data. Human capital is hypothesized to affect relative risk aversion; age has been used in previous work as a proxy for human capital. The objective of this study is to determine whether there is a life‐cycle pattern that is independent of the effect of human capital. The results suggest an affirmative answer. Moreover, this independent life‐cycle pattern is the opposite of that estimated in a previous study that used age as a proxy.
ISSN:0270-2592
1475-6803
DOI:10.1111/j.1475-6803.1986.tb00434.x