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Attitude to financial risk across Europe
Louis Williams,
Head of Psychology & Behavioural Insights at Dynamic Planner
As we begin to witness a shift in saving intentions and behaviours by households across Europe, it is somewhat surprising that a lack of research exists comparing attitudes to risk. Arguably, understanding an individual’s willingness to take financial risk and their ability to tolerate uncertainty is one of the most important elements of the investment process.
Ambiguity about the future and the anxiety it brings may need to be handled differently within diverse cultures, and research shows how such cultural differences in attitudes towards uncertainty avoidance impact judgments of risk.
Most existing studies within this area of research have compared risk preferences across countries having very divergent cultural backgrounds, such as those in Southeast Asia and in the West, with the US versus China being frequently examined.
By contrast, limited research has gathered data from European countries, which are culturally much more similar, closer in geographical proximity, share economic systems based on a capitalist ideology, have smaller divergences in wealth and incomes per capita, and smaller differences in educational priorities.
Of the few existing studies exploring attitudes to risk across the globe, researchers have not used a valid and reliable measure nor had access to versions of a psychometric questionnaire developed using the same psychological theory and methodology which...
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