Intergenerational Transmission Of Risk Preference

Household finance theory has gradually become an important part of the field of finance.It mainly studies the household financial asset allocation behavior,which is the result of a series of factors jointly determined,and risk preference is one of them.In recent years,economists have paid more and more attention to the root causes of risk preference,especially whether intergenerational transmission is an important factor affecting the formation of risk preference.The theory of cultural intergenerational transmission endogenizes the attitudes of parents,proposing that parents tend to let their children behave similarly to their own behaviors.This article aims to study whether there is intergenerational transmission of risk preference within household,and then examine whether intergenerational transmission is an important reason for determining household participation in financial decision-making on this basis.Based on the 2018 China Family Panel Studies(CFPS)micro data,the Ordered Probit model regression method is used to empirically test the impact of parents' risk preference on children's risk preference.This article finds that the higher the parents' risk preference,the higher the children's risk preference.The heterogeneity test results show that if the children's gender is not distinguished,there is no difference in the intergenerational influence of the parents on the children's risk preference;but when the children's gender is distinguished,the intergenerational transmission of risk preference exists in the same gender dimension.What's more,parents' risk preference has a stronger influence on the risk preference of the only child.The results also show that the two paths of parent-child interaction and child observation have a moderating effect on parents' risk preference and children's risk preference.A further expansion finds that the intergenerational transmission of risk preference affects the household asset allocation.Specifically,the stronger the intergenerational transmission of risk preference in the household,the greater the proportion of households allocated to financial assets,and the less expenditure on commercial insurance.The research in this article shows that parents' risk preference can be passed on to their children.It also shows that the intergenerational transmission of risk preference not only affects children's attitudes and behaviors,but may also have an impact on children's social and economic outcomes,as well as household financial asset allocation.