A Cross-Cultural Comparison of Three Risk Tolerance Measures: Turkey and the United States Case
Keywords:Financial Risk Tolerance, Cross-Cultural Comparison, Risk Tolerance Measures
An individual’s attitude toward financial risk tolerance (FRT) is an important preference that influences financial decision-making under uncertainty. FRT involves inter-temporal resource allocation. Accurate and reliable measures of FRT are essential for professionals advising consumers as well as researchers who are trying to predict, and understand consumer behavior. This study explores cross-cultural risk tolerance by comparing random samples from Turkey, and the United States. Similar and distinctive attitudes and patterns regarding FRT are identified. Three subjective measures of FRT are employed in this study: Grable and Lytton (1999), Hanna, Gutter and Fan’s (2001) improved version of Barsky, Juster, Kimball and Shapiro (1997), and the Survey of Consumer Finance’s item on risk tolerance. Data was collected via an online survey that used the above-mentioned FRT measures. There were two versions: the original American English version, and a culturally translated Turkish version. To explore the correlation of FRT among measures, we use bivariate analysis by individually employing Pearson Chi-square test of independence, and cross tabulations analysis to each sample. In addition, by pooling both samples, we conduct cumulative logistic regression. We delineate FRT differences and consistencies between countries across subjective financial risk tolerance measures.
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