Abstract

This study examines differences in risk tolerance and asset allocation among white, black, and Hispanic households in the United States. Regressions are run using a sample chosen by propensity score matching because there are substantial differences in the distributions of covariates among race and ethnicity. This study finds that white, black, and Hispanic households are more likely to have similar risk tolerances. In addition, this study finds that all three households are more likely to have similar asset allocations. Simultaneously, in practice, there is wealth inequality between whites and nonwhites. These results imply that differences among race and ethnicity do not affect risk tolerance and asset allocation, and therefore, wealth inequality between whites and nonwhites is not attributed to asset allocation.

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