The distribution of financial responsibility within the family and its effect on family risk behaviors

Abstract

[ACCESS RESTRICTED TO THE UNIVERSITY OF MISSOURI AT REQUEST OF AUTHOR.] Men are more willing to take risks and invest more in stocks than women. Do gender differences with respect to risk tolerance still exist within married and cohabiting couples? In a family, spouses might have different risk attitudes and risk behaviors. This dissertation used the Health and Retirement Survey (HRS) longitudinal data to explore the distribution of financial responsibility in a family. Family members designated as "financial respondents" were the people most knowledgeable about the financial situation of the family and they answered HRS questions about finance. Also, the dissertation studied the relationship between the gender of financial respondents and portfolio allocation, adequate emergency funds, and debt burden. The financial respondent's approach to these three factors showed the respondent's attitude toward risk and constituted a family's financial risk behavior. The dissertation found that a family in which the husband/male partner was financially responsible had a higher proportion the family's portfolio in business interests and less in cash. Intra-family interactions between husband and wife reduced gender differences regarding an adequate emergency fund and debt burden. This paper further compared the actual risks in the portfolio with self-reported risk tolerance and found that when women were the financial respondent, the risk of their portfolio might be closer to their self-assessment risk tolerance. Emotionally stable spouses have a greater impact on family investment decisions than spouses with lower emotional stability.