The Effect of Advanced Age and Equity Values on Risk Preferences

David Blanchett, Michael Finke, Michael Guillemette

Research output: Contribution to journalArticlepeer-review

10 Scopus citations


The authors analyze the effect equity values and age have on the risk aversion of participants in U.S.-defined contribution plans using a unique dataset with daily responses to a risk tolerance questionnaire. They find that older investors are more risk averse compared with younger cohorts when controlling for the level of the S&P 500 Index, account balance, income, savings percentage, equity percentage and allocation fund percentage. They also find that risk preferences are influenced by the level of the S&P 500, but only in advanced age. This finding is consistent with decreasing absolute risk aversion when wealth is proxied by the S&P 500 Index.

Original languageEnglish
Pages (from-to)434-441
Number of pages8
JournalJournal of Behavioral Finance
Issue number4
StatePublished - Oct 2 2018


  • Financial planning
  • Old age
  • Risk aversion
  • Risk preferences
  • Stock prices


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