Disposable income ↔ Economic risk tolerance
Higher Disposable income moves Economic risk tolerance only in some conditions. Read the mechanism.
Holt–Laury measures the preference. Income changes the budget. Do not call either 'testosterone'.
Observational · Moderate · N=212
The association disappears when you account for other factors, like socioeconomic status or healthy-user bias.
Mechanism
Holt and Laury showed that the incentive scale itself moves estimated risk aversion. Background wealth should do the same. A T–risk paper that skips wealth is leaking.
Caveats
Lab lists are not portfolio choice. Gender composition of the room changes means.
Effect
qualitative. Richer people can afford more risk; risk-tolerant people may sort into higher-variance pay. Both arrows are live.
Nodes
Named confounders
Cite this page
What Causes What. “Disposable income → Economic risk tolerance.” https://whatcauseswhat.org/edges/e-income-risk (atlas updated 2026-09-02).
Papers
- Risk aversion and incentive effects
C. A. Holt, S. K. Laury · 2002 · American Economic Review