Table 1.

Risk tolerance response categories

Response category	Downside risk of risky job		Bounds on risk tolerance
	Accepted	Rejected	Lower	Upper
1	None	1/10	0	.13
2	1/10	1/5	.13	.27
3	1/5	1/3	.27	.50
4	1/3	1/2	.50	1.00
5	1/2	3/4	1.00	3.27
6	3/4	None	3.27	∞

NOTE: Respondents choose between a job with a certain income and a job with risky income. With equal chances, the risky job will double lifetime income or cut it by the specific fraction shown in the columns labeled downside risk. The largest risk accepted and the smallest risk rejected across gambles define a response category. In 1992, there are four categories 1–2, 3, 4, and 5–6. In 1994 and later surveys, there are six response categories. The last two columns show the bounds on relative risk tolerance consistent with these response categories in the absence of response error.