Date of Award

Fall 5-1-2026

Document Type

Thesis

Degree Name

Bachelor of Arts (BA)

Department

Economics

First Advisor

Luidmila Malyshava

Second Advisor

Monica Das

Abstract

This paper examines how perceived financial hardship shapes adult financial risk tolerance using data from the 2021 FINRA National Financial Capability Study (N = 27,118). Contrary to traditional theory, results show a positive relationship between perceived hardship and risk tolerance, consistent with a "risk-taking under constraint" framework and Prospect Theory: individuals who feel financially behind are more willing to accept risk in pursuit of improvement. Financial literacy amplifies rather than mitigates this effect, and age moderates the relationship, younger adults show the strongest responsiveness to hardship. These findings suggest that financial risk preferences are shaped not only by objective economic conditions, but by individual perception, knowledge, and life-cycle position.

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