Author(s)

Xuping Luo

Corresponding Author

Xuping Luo

ABSTRACT

With the rapid development of China’s economy, venture capital, as an effective means of property appreciation, is becoming more and more popular. Therefore, the risk preference which is closely related to venture capital is more and more significant and vital. Based on the micro-database of CHFS, this paper conducted an empirical study on the mechanism of family income affecting subjective and objective risk preference. By using parametric models, kernel regression and semi-parametric regression, it is found that the relationship between family income and family risk preference (both objective and subjective risk preference) is u-shaped. That is, both low-income and high-income families have high risk preference, while those in between have lower risk preference. This paper also found that although the measurement of is different, the subjective risk preference and objective risk preference of families changes consistently with the fluctuation of family income. Finally, according to the research results, this paper gave several relevant policy suggestions and opinions.

KEYWORDS

Risk preference, family income, asset allocation, linear regression, non-parametric estimation