A Correlational Study of Financial Risk Attitudes, Investment Behaviour and Life Satisfaction of Middle Class People

Abstract

The purpose of this study is to analyze the relation between well being of individuals (in terms of life satisfaction) and their financial risk perceptions. Also, this study attempts to understand the investment behaviour of middle class in India belonging to 3 occupational categories- public sector employees, private sector employees and the self employed (entrepreneurs). Due to the changing demographics, economic and social landscape of the Indian society, it is essential to determine whether the present well-being of the citizens is related to their attitudes towards financial risk. This becomes all the more imperative as the Indian society becomes more risk-tolerant over the years. Financial Risk attitude describes affective feelings of like or dislike towards a scenario involving financial risk that have an influence on financial decision making and behaviour. Well being indicates the level at which an individual is satisfied with the present conditions of his/her life. Investment Behaviour reflects an individual's investment patterns. In our analysis, we divided our sample into 3 groups of self employed, private sector employees and public sector employees and proceeded to study the financial attitudes and investment behaviours of each group. We believe that studying risk perception and investment behaviour in the context of Indian economic environment can offer fresh interesting insights on the changing financial attitudes and responses of citizens of developing India. A strong and statistically significant positive correlation was found between life satisfaction and financial risk-seeking attitude. Certain differences were noted in the magnitude and statistical significance of the correlation of the 2 variables for the 3 occupational categories. Further, differences were noted in the investment behaviour of the 3 groups.