Residualized Big Five Traits and Financial Risk Tolerance: Connecting Tolerance to Behavior
Year: 2026
Type: article
Study design: Observational Study
Abstract: Research on financial risk tolerance and risk-taking increasingly incorporates personality traits into predictive and descriptive models of risk-taking behavior; however, intercorrelations among traits can obscure the unique contributions of individual traits. This is known as the suppressor effect. This study employed a two-stage analytic framework to test and adjust for suppressor effects across the Big Five personality dimensions in describing financial risk tolerance. In Stage 1, correlation and OLS regression analyses identified suppression patterns, revealing that the explanatory validity of some factors was distorted by shared variance. In Stage 2, suppression-adjusted trait estimates were used to reassess their unique association with financial risk-taking mediated through financial risk tolerance. Results indicate that Openness to Experience and Extraversion are the strongest descriptors of financial risk-taking once suppressor effects are controlled. At the same time, Agreeableness and Conscientiousness contribute modestly and context-dependently to descriptions of financial risk-taking. These findings demonstrate that ignoring suppression effects can lead to mischaracterizing the role of personality in financial decision-making. This study shows that more precise estimates of trait influences can improve theoretical models of investor behavior and enhance the delivery of financial advice and education.
Source: Risks
Authors: John E. Grable, Eun Jin Kwak
Institutions: University of Georgia, University of Wisconsin–Green Bay
Language: English
Subfield: General Decision Sciences
Field: Decision Sciences
Domain: Social Sciences
Open Access status: gold
Estimated APC paid: $2,172
OpenAlex ID: W7140142232