Quantitative analysis of the relationship between higher-order risk attitudes and financial literacy

The following study is an attempt to identify a correlate of the higher-order attitudes prudence and temperance which could be used to manipulate these attitudes in the context of a confirmatory experiment. To this end, the correlational relationship between financial literacy and people’s higher-order risk attitudes have been analyzed. Results from the linear regression analysis indicate that people who possess greater financial knowledge are also more likely to exhibit prudence. In addition to this, risk averters and risk lovers have been analyzed separately in order to determine the prevalence and correlates of mixed risk attitudes. Results indicate that mixed risk aversion is a lot more prevalent than mixed risk loving. Interestingly, a new type of risk lover was identified in the process. Implications for future research are discussed.