The effect of birth order on financial risk tolerance and asset allocation.

This study examines birth order as a predictor of financial risk tolerance. Three hundred sixty-eight individuals, drawn predominantly from a large university in the Southwestern United States, completed a psychometrically sound financial risk tolerance measure (Grable and Lytton, 1999). The results confirmed previous literature in regard to gender and education as predictors of risk tolerance. However, for the first time, firstborn individuals were shown to be significantly less risk tolerant than later-born individuals. Furthermore, it was shown that later-born males were more likely than the first-born to have a majority of their portfolios allocated in stock; additionally the later-born males were more likely than the later-born females to hold a greater proportion of their assets in stocks.