Risk preference measurement and risk communication – A large-scale comparison of methods and its implications for the pension industry

Understanding risk preferences is crucial in the financial sector, particularly in the Netherlands, where pension funds must consider participants’ risk preferences in the new pension system. However, there is no scientific consensus on which methods to use for risk-preference measurement, and the Authority for Financial Markets does not endorse specific methods.

Furthermore, the implementation of the new pension system mandates the use of visual representations to communicate pension uncertainty. Nevertheless, there is a lack of understanding how these visuals are perceived. Do they emphasize all sources of risk—i.e., varying returns, likelihoods, and timings— to the same degree? A systematic investigation of risk-preference measurement methods and risk communication is essential to address these challenges. It would offer actionable insights, enabling the sector to meet regulatory requirements and substantiate their current methods.

Our project will generate this knowledge in three work packages. Firstly, in experiments conducted with a large Dutch population sample, we will compare different risk-preference measurement methods from academia and practice concerning their ability to predict real-world risk-taking behavior and their testretest reliability (correlation between repeated elicitations with the same measure). Secondly, we will explore which confounds systematically distort measurement, obtaining insights into whether risk preferences are universal traits or vary (predictably) across domains, and draw inferences on the applicability of specific measurements. Lastly, we will use mouse-tracking and eye-tracking techniques to examine how individuals divide their attention across the different risk sources and how this shapes their risk perceptions across different risk-preference measurements and ways of communicating risk.


This project is funded and carried out under the auspices of Instituut Gak.

Netspar, Network for Studies on Pensions, Aging and Retirement, is a thinktank and knowledge network. Netspar is dedicated to promoting a wider understanding of the economic and social implications of pensions, aging and retirement in the Netherlands and Europe.


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