4.5 Article

Do sources of money matter in risk-taking behaviour?

Journal

APPLIED ECONOMICS
Volume 54, Issue 4, Pages 443-466

Publisher

ROUTLEDGE JOURNALS, TAYLOR & FRANCIS LTD
DOI: 10.1080/00036846.2021.1963412

Keywords

Risk-taking; risk aversion; financial decision-making; source of income

Categories

Funding

  1. Universite Savoie Mont Blanc
  2. Universite de Lyon [ANR-16-IDEX-0005]

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The study reveals that an increase in temporary income significantly boosts an individual's risk-taking capacity, and having multiple sources of money makes individuals more prone to taking risks. The origin of money plays a vital role in determining risk-taking behavior.
Assuming that money is fungible, income and wealth affect risk aversion. In the present study, we investigate whether the source of money affects risk-related decision-making. We use the percentage of temporary income and sources of income to capture the heterogeneity of risk-taking behaviour. The results indicate the significant and robust role of the temporary portion of income in explaining risk-taking behaviour: a 1% increase in temporary income corresponds to up to a 12.7% increase in risk-taking. Furthermore, having multiple sources of money is associated with greater risk-taking, and the origin of money matters with regards to risk-taking.

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