Related Experiment Video
Updated: Jun 13, 2026

Experimental Research Examining How People Can Cope with Uncertainty Through Soft Haptic Sensations
Published on: September 16, 2015
Imputing Risk Tolerance From Survey Responses
Miles S Kimball1, Claudia R Sahm, Matthew D Shapiro
1Miles S. Kimball and Matthew D. Shapiro are Professors, Department of Economics, and Research Professors, Survey Research Center, University of Michigan, Ann Arbor, MI 48109, and Research Associates, National Bureau of Economic Research, Cambridge, MA 02138. Claudia R. Sahm is Economist, Division of Research and Statistics, Federal Reserve Board, Washington, DC 20551.
Abstract:
Economic theory assigns a central role to risk preferences. This article develops a measure of relative risk tolerance using responses to hypothetical income gambles in the Health and Retirement Study. In contrast to most survey measures that produce an ordinal metric, this article shows how to construct a cardinal proxy for the risk tolerance of each survey respondent. The article also shows how to account for measurement error in estimating this proxy and how to obtain consistent regression estimates despite the measurement error. The risk tolerance proxy is shown to explain differences in asset allocation across households.
Related Concept Videos
Surveys
Survey Safety
Types of Biopharmaceutical Studies: Controlled and Non-Controlled Approaches
Non-controlled studies, commonly employed for initial exploration, lack a control group, rendering them susceptible to biases and external influences. In contrast, controlled...
Relative Risk
Sample Proportion and Population Proportion
Margin of Error