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Senior Capstone 2021

Risk Perception and Tolerance: A study of risk tolerance in individuals aged 18 to 25

Abstract: This paper addresses risk perception and the propensity of individuals aged 18 to 25 to take on risk. Following a review of the literature related to selected economic shocks such as the Great Depression and the Great Recession, the discussion addresses how significant economic externalities can impact decision-making. In order to assess contemporary impacts, a survey was created to assess risk perception using a convenience sample of individuals aged 18 to 25. Given that some portion of the participants’ lives may have been impacted by the Great Recession, the survey results were compared against prior studies to determine the degree of risk aversion and its relationship to having lived through an economic shock. Findings suggest that the current generation of people aged 18 to 25 may have a lower propensity to take risk much aligned to the generation with a relationship to the Great Depression. The results are only preliminary, but the evaluation can be replicated across a larger sample to provide greater insight.

Siddharth Singh is a fourth year studying Computer Science and Economics at Northeastern University. He has worked at HarbourVest Partners as a Business Intelligence Developer and at Arbella Insurance as a Research & Data Analyst. His immediate plans are to complete his degree and graduate in August 2021 after which he hopes to be working with data in the technology or financial sector.