Personality and risk-taking: exploring gender-based differences
Abstract
A key component to the financial market is understanding how people act and react in different situations, with regard to investment decisions. Uncertainty, along with risk, is also a key concept in economic decision making. To predict and understand economic behaviour, one needs to understand an individual’s attitude toward perceived risk. In order for an individual to be able to make sound investment decisions, the individual will need to possess some knowledge of their level of risk appetite. Along with risk appetite, individuals tend to expect a certain amount of risk to encompass various risk-taking behaviours. Furthermore, the risk appetite of the individual depends on the individual’s attitude toward the perceived risk. When measuring the risk appetite of individuals, it is generally expected that there are two main categories of risk appetite, namely risk-averse and risk seeking individuals. The attitude an individual hold toward the taking or avoiding of a risk has mostly evolved in three main contexts namely decision processes, social psychology and personality models. With regard to an individual’s risk appetite, there is a general stereotype in literature that suggest female risk-takers are more risk averse than their male counterparts. Although risk behaviour has been widely studied, few studies have been conducted on the difference between gendered risk-taking of individuals. Little to no evidence exists on the notion or reasoning of the individual’s risk-taking behaviour beyond the quantitative measurement thereof. Few studies provide a precise answer as to the reasons for this level of risk aversion in the female context. The purpose of this study was to determine whether there is a difference in gendered risk-taking behaviour in the South African context, and if so, the causes in differences of gender-based risk-taking behaviour. This study followed a mixed methods research design. For the quantitative portion of this study, the target population comprised full-time students registered at the South African Higher Educational Institutions, who are enrolled for commerce degrees. From the sampling frame, a non-probability judgement sample of one traditional university in Gauteng was selected. A non-probability convenience sample of 462 registered full-time students was drawn. A self-administered questionnaire was distributed to the sample. The questionnaire took, on average, 20 minutes to complete. Upon completion of the questionnaire, students could indicate whether they wanted to participate in the qualitative portion of this study. Volunteers attended a semi-structured interview, pertaining to the data collection method for the qualitative phase. The interviews took on average 40 minutes to complete. The findings of this study indicate that individuals are willing to participate in risk-taking behaviour across the five domains of life. Participants also indicated that the male sample are more risk-seeking than their female counterparts. The male sample indicated to be less risk-seeking than their female counterparts, only in the social domain of life. Reasons pertaining to female risk aversion included females being more thorough in terms of research before engaging in risk-taking behaviour, their risk-taking behaviour was related to the outcome of the risk and they needed advice from their elders and/or peers before engaging in a risk-taking activity. Also, the level of financial knowledge an individual has affected their risk-taking behaviour, for both the male and female samples. Insights gained from this study would enable the development of interventions that could enhance female investment participation. This would enhance their level of economic empowerment and participation. The results obtained in this study can also aid in the development of investment vehicles designed specifically for students, given their risk-taking personality.