We derive the distribution of a proxy for the risk tolerance in a representative sample of U.S. households. Our measure is deduced from the willingness to bear risk as indicated by the variance of returns of each household's observed portfolio. The estimates, obtained assuming constraints on portfolio composition, show substantial heterogeneity across households. We find that risk tolerance falls with age and increases with wealth. Other variables, such as education, gender, race, and household size, do not have a significant relation to risk attitude. Our findings are robust to changes in portfolio definition, asset returns, and sample composition.

We use household-level data covering a ten-year period (1984 to 1993) to investigate the likely determinants of the Italian recession of 1993, the first year after WWII when private consumption fell. Consumption fell most for working-age households and for the self-employed. Our evidence is consistent with the response to permanent negative shocks due to the major pension reform of 1992 and the introduction of stricter tax-compliance measures for the self-employed. This is still true when we control for the role played by job losses and the collapse of the retail sector that characterized the early 1990s.