An Exploration of the Role of Risk Tolerance in the Financial Empowerment of Black Women

Abstract This study examines the intersection of race, gender, and financial risk tolerance in relation to wealth accumulation, with a particular focus on Black women in the United States. Addressing a notable gap in the literature, this research examines the association between racial identity and gender role attitudes, and whether risk tolerance is linked to wealth-building trajectories. It is hypothesized that reduced risk tolerance — frequently cited as a barrier to wealth accumulation — may disproportionately impede Black women’s financial advancement, thereby contributing to the persistent racial wealth gap. Using data from the National Longitudinal Survey of Youth 1979 (NLSY79), we found that gender role attitudes are not strongly associated with risk tolerance or wealth accumulation. We did find — consistent with human capital theory — that wealth and education are positively associated with higher levels of risk tolerance. However, structural disparities in wealth and educational attainment among Black women diminish the wealth-enhancing effects typically associated with risk tolerance. The analysis highlights a reinforcing cycle across wealth, education, and risk attitudes that serve to deepen racialized economic inequality. Policy implications from this study center on the need to address structural deficits in wealth and education, as well as to promote financial risk literacy. Enhancing the understanding of risk-return trade-offs may offer a viable pathway toward narrowing the wealth gap experienced by Black women and improving their long-term financial security.