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» Chinese-Society >> View Article
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| Are The Chinese Bigger Risk Takers? |
By:
Jessie X. Fan |
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In this research we compare the risk preference attitudes and behavior between a sample of 470 Chinese workers and a sample of 2,671 Americans from the Survey of Consumer Finances. Our findings show that Chinese in our sample are more risk tolerant than Americans in
their financial decisions, both in attitudes and behavior. Alternative explanations such as a lack of knowledge about the relationship between risk and return among the current generation
Chinese are also explored.
Risk tolerance is an extremely complex phenomenon that is studied by disciplines such as economics, psychology, finance, and management science (Roszkowski, 1993). It is an important concept when financial counseling and planning professionals help individuals and families
make long-term financial decisions. It is also a key concept of the expected utility function in economic literature. In this study, we use the definition from the finance literature.
Risk is measured by the investment volatility. Risk tolerance refers to people’s attitudes and behavior
regarding financial risk (Roszkowski, 1993). The purpose of this study is to compare risk preference attitudes and behavior between Americans and Chinese. Such an investigation has both theoretical and practical importance.
Theoretically, this research will provide additional empirical evidence for refining existing theories in cultural comparative studies of risk tolerance.
This research also adds to the literature of comparative studies of risk tolerance by using data collected from non-students. Practically, the findings of this study can provide knowledge about similarities and differences in risk tolerance between Americans and Chinese. Such knowledge
may be useful to American entrepreneurs doing business in China in an era of increasing economic globalization, and to American businesses and professionals working with clients who have a Chinese heritage.
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Practically, our findings are useful for American entrepreneurs (including financial management businesses) conducting business in China, and for U.S. financial planners and counselors in understanding the cultural differences when helping their clients with a Chinese cultural background.
The findings can also be useful to social workers who help addicted gamblers of Chinese background to understand the cultural context of their behavior and to develop special programs that take this cultural context into consideration. Finally, our findings have implications for future empirical research. For our findings and findings from previous study on this topic to be generalized to Chinese population, it is very important for future studies to use more representative Chinese samples, especially samples including Chinese living in smaller urban areas and rural areas.
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Download the full paper from:
http://cals.arizona.edu/fcs/tcai/workingpapers/wp53fan.pdf |
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