| Most adults are married, plan for retirement with their spouse, and pool assets to a significant degree. How then are each individual’s risk preferences combined in choosing the portfolio that represents for them the optimal tradeoff between risk and return? There are two pathways through which marriage could amplify the expression of individual risk preferences at the household level. First, if people choose spouses in part based on their appetite for risk, or another characteristic correlated with risk tolerance, then there could be polarization of household level risk preferences towards extremes. Second, spouses may strategically adjust their decisions to compensate for their spouse’s preferences. Is an only mildly risk averse person that is... |
