This study examines the short- and long-run effects of the COVID-19 pandemic on financial risk tolerance (FRT) in the United States, focusing on racial/ethnic and regional differences. Using the 2018, 2021, and 2024 waves of the National Financial Capability Study (NFCS) and a propensity score matching difference-in-differences (PSM-DID) framework, we construct treated (COVID-affected) and control groups to estimate causal impacts with repeated cross-sectional data. Results indicate a significant decline in FRT in the short run (2021) that persists through 2024, suggesting a lasting impact of the pandemic on households’ willingness to take financial risk. Subgroup analyses reveal heterogeneity: women, lower-income households, and those with greater financial knowledge report lower FRT, while racial/ethnic differences are mixed. Notably, higher educational attainment is associated with lower FRT, diverging from much of the prior literature. Overall, the pandemic produced a persistent reduction in FRT with important demographic variation, underscoring the need for targeted financial education and policy responses to support resilient wealth-building.
