Table 4.
Household Income and Wealth
| Latent Variable: Log of Risk Tolerance
| ||
|---|---|---|
| Parameter | All Gamble Respondents | Working Household Heads |
| Direct Effect: β | ||
| Log of Current Income | 0.03 (0.03) |
0.03 (0.06) |
| Log of Positive Current Wealth | 0.01 (0.02) |
−0.03 (0.03) |
| Log of | Negative Current Wealth | | 0.03 (0.02) |
0.01 (0.03) |
| Direct and Type Effects: β + λ | ||
| Log of Average Income |
0.09 (0.03) |
0.14 (0.06) |
| Log of Positive Average Wealth | 0.003 (0.014) |
−0.02 (0.02) |
| Log of | Negative Average Wealth | |
0.05 (0.03) |
0.01 (0.04) |
|
| ||
| Log-likelihood | −23573.5 | −10022.8 |
|
| ||
| Number of Respondents | 12,003 | 5,692 |
NOTE: Asymptotic standard errors are in parentheses. Estimates in bold are statistically significant at the 5% level. Income is total earnings, pensions, government transfers, and capital income received by the respondent and spouse in the household. Wealth is total household wealth (including housing, vehicles, businesses, and IRAs) minus all debts. The model in the first column is estimated with all the gamble responses. Appendix Table 1 provides the full set of covariates and estimates. The second column only includes gamble responses from household heads who are working.