Age, Gender and Dispositional Greed as Psycho-social Correlates of Financial Risk Tolerance

Abstract

This study was aimed at understanding how psycho-social factors predict financial risk 
tolerance. The study adopted a cross-sectional design and a convenience sampling technique 
on a sample of Nigerian undergraduates drawn from the Department of Psychology of the 
University of Lagos. Participants were administered questionnaire containing demographic 
questions such as age and gender; Dispositional Greed Scale (DGS) for evaluation of greedy 
behaviour and the Grable-Lytton Risk Tolerance Scale (GL-RTS) for financial risk tolerance 
assessment. First, we explored how age is related to financial risk tolerance. Second, we 
analyzed the gender difference in financial risk taking and finally, we analyzed how 
dispositional greed is associated with financial risk tolerance. Results showed no significant 
relationship between age and financial risk taking (p >.05), no gender difference in financial 
risk tolerance (p >.05) and no significant relationship between dispositional greed and 
financial risk tolerance (p >.05). Additionally, the interaction effect of age and gender failed 
to predict financial risk tolerance (p >.05). The results suggest that understanding financial 
risk tolerance is a complex process that goes beyond the exclusive use of psycho-social 
factors such as age, gender and dispositional greed; thus, these factors should be used with 
caution by financial planners when assessing investors? risk tolerance.