The Grable and Lytton risk-tolerance scale

A 15-year retrospective

Authors

  • Stephen Kuzniak Department of Financial Planning, Housing and Consumer Economics, University of Georgia
  • Abed Rabbani
  • Wookjae Heo
  • Jorge Ruiz-Menjivar
  • John Grable

DOI:

https://doi.org/10.61190/fsr.v24i2.3240

Keywords:

Risk tolerance, Risk, Risk scale, Risk scoring, Risk assessment

Abstract

Over a decade ago, Grable and Lytton (1999) developed, tested, and published a financial risk-tolerance scale in Financial Services Review that has since been widely used by consumers, financial advisers, and researchers to evaluate a person’s willingness to engage in a risky financial behavior. Analysis of data (n = 160,279) spanning the timeframe 2007 to 2013 provides evidence that the risk-tolerance scale’s reliability and validity have remained robust since the scale was first developed. The scale’s estimated Cronbach’s α was 0.77 during this time period. Consistent with the literature, high scale scores (representing a greater willingness to take risks) were found to be associated with equity ownership and negatively related to cash and bond holdings.

Downloads

Published

2015-06-30

How to Cite

Kuzniak, S., Rabbani, A., Heo, W., Ruiz-Menjivar, J., & Grable, J. (2015). The Grable and Lytton risk-tolerance scale: A 15-year retrospective. Financial Services Review, 24(2), 177–192. https://doi.org/10.61190/fsr.v24i2.3240

Issue

Vol. 24 No. 2 (2015): Summer 2015

Section

New Original Submission

License

Copyright (c) 2014 Academy of Financial Services

Creative Commons License

This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.

Author(s) retain copyright and grant the Journal right of first publication with the work simultaneously licensed under a Creative Commons Attribution-NonCommercial 4.0 International License that allows to share the work with an acknowledgment of the work's authorship and initial publication in this Journal.

This license allows the author to remix, tweak, and build upon the original work non-commercially. The new work(s) must be non-commercial and acknowledge the original work.