Do sources of money matter in risk-taking behaviour?

Abstract

Assuming that money is fungible, income and wealth affect risk aversion. In the present study, we investigate whether the source of money affects risk-related decision-making. We use the percentage of temporary income and sources of income to capture the heterogeneity of risk-taking behaviour. The results indicate the significant and robust role of the temporary portion of income in explaining risk-taking behaviour: a 1% increase in temporary income corresponds to up to a 12.7% increase in risk-taking. Furthermore, having multiple sources of money is associated with greater risk-taking, and the origin of money matters with regards to risk-taking.

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