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The Academy of Financial Services 35th Annual Meeting

September 21–22, 2021

Virtual

An Assessment of the Association between Political Orientation and Financial Risk Tolerance

Wednesday, September 22, 2021 at 2:15 PM–3:15 PM Eastern Time (US & Canada) add to calendar
Virtual
Keywords
financial risk tolerance, political orientation, political affiliation
Short Description

The purpose of this paper is to answer the following two questions. First, to what extent is political orientation associated with financial risk tolerance, and second, to what degree is political orientation predictive of changes in financial risk tolerance across periods. Using data from a panel study of likely voters and financial decision makers prior to and after the 2020 U.S. presidential election, it was determined that Republican and Democratic orientation was, to a certain extent, descriptive of cross-sectional risk tolerance during the period of analysis. Prior to the 2020 election, Republicans were found to exhibit greater risk tolerance compared to Democrats. Across periods, the risk tolerance of Republicans declined meaningfully while the risk tolerance of Democrats increased. The results from this study suggest that political orientation is informative for financial risk tolerance in the context of macro events and the biopsychosocial characteristics of a financial decision maker.

Lead & Corresponding Author

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Dr John Grable, University of Georgia
Job Title
Professor
Email Address

Additional Authors

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Eun Jin Kwak, University of Georgia
Job Title
Ph.D. Candidate
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Dr. Dee Warmath, Ph.D., University of Georgia
Job Title
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