Languages differ widely in the ways they encode time. I test the hypothesis that the languages that grammatically associate the future and the present, foster future-oriented behavior. This ...prediction arises naturally when well-documented effects of language structure are merged with models of intertemporal choice. Empirically, I find that speakers of such languages: save more, retire with more wealth, smoke less, practice safer sex, and are less obese. This holds both across countries and within countries when comparing demographically similar native households. The evidence does not support the most obvious forms of common causation. I discuss implications for theories of intertemporal choice.
We investigate whether individual experiences of macroeconomic shocks affect financial risk taking, as often suggested for the generation that experienced the Great Depression. Using data from the ...Survey of Consumer Finances from 1960 to 2007, we find that individuals who have experienced low stock market returns throughout their lives so far report lower willingness to take financial risk, are less likely to participate in the stock market, invest a lower fraction of their liquid assets in stocks if they participate, and are more pessimistic about future stock returns. Those who have experienced low bond returns are less likely to own bonds. Results are estimated controlling for age, year effects, and household characteristics. More recent return experiences have stronger effects, particularly on younger people.
Using data from a field experiment in Kenya, we document that providing individuals with simple informal savings technologies can substantially increase investment in preventative health and reduce ...vulnerability to health shocks. Simply providing a safe place to keep money was sufficient to increase health savings by 66 percent. Adding an earmarking feature was only helpful when funds were put toward emergencies, or for individuals that are frequently taxed by friends and relatives. Group-based savings and credit schemes had very large effects.
•Financial self-efficacy has an explanatory role in personal finance behaviour.•Higher financial self-efficacy is associated with investment and savings products.•Lower financial self-efficacy is ...associated with debt-related products.•Financial self-efficacy is independently identified from financial literacy factors.
Much policy attention has been placed on enhancing individuals’ financial knowledge and literacy, chiefly through financial education programs. However, managing one’s personal finances takes more than financial knowledge and literacy: an individual also needs a sense of self-assuredness, or ‘self-belief’, in their own capabilities. This personal attribute is known within the psychology literature as ‘self-efficacy’. This paper examines the significance of an individual’s financial self-efficacy in explaining their personal finance behaviour, through the application of a psychometric instrument. Using a 2013 survey of Australian women, financial self-efficacy emerges as one of the strongest predictors of the type and number of financial products that a woman holds. Specifically, our analysis reveals that women with higher financial self-efficacy – that is, with greater self-assuredness in their financial management capacities – are more likely to hold investment and savings products, and less likely to hold debt-related products. Even alongside other important factors – such as education, financial risk preferences, age and household income – the explanatory power of financial self-efficacy is found to be significant at the 1% critical level. Moreover, the significance of financial self-efficacy is independently identified from that of financial literacy factors, which bears important implications for the development of policies aiming to improve financial outcomes.
•Gender differences in financial risk tolerance are explored and decomposition methods are used.•Individual variables affect financial risk tolerance differently for men and women.•Income uncertainty ...and wealth relate to high risk tolerance differently for men and women.•Income uncertainty relates to some risk tolerance differently for men and women.
The purpose of this research is to explore gender differences in financial risk tolerance using a large, nationally representative dataset, the Survey of Consumer Finances. The impact of the explanatory variables in the model is allowed to differ between men and women to decompose gender differences in financial risk tolerance. The results indicate that gender differences in financial risk tolerance are explained by gender differences in the individual determinants of financial risk tolerance, and that the disparity does not result from gender in and of itself. The individual variables that moderate the relationship between gender and high risk tolerance are income uncertainty and net worth, with income uncertainty moderating the relationship between gender and some risk tolerance. Financial fiduciaries should understand the differences in income uncertainty and net worth between men and women and how those differences relate to risk tolerance.
Financial toxicity is the adverse impact of a cancer diagnosis on a patient’s financial well‐being resulting from direct or indirect costs. Potential consequences of financial toxicity include ...material loss, psychological distress, and/or maladaptive coping strategies. This review will summarize the prevalence, causes, and consequences of financial toxicity, with an emphasis on strategies to anticipate and reduce its burden. Improvement will require multilevel, coordinated efforts between stakeholders including patients, providers, health systems, payers, manufacturers, and policymakers.
Can psychology-guided information disclosure induce borrowers to lower their use of high-cost debt? In a field experiment at payday stores, we find that information that makes people think less ...narrowly (over time) about finance costs results in less borrowing. In particular, reinforcing the adding-up dollar fees incurred when rolling over loans reduces the take-up of future payday loans by 11% in the subsequent 4 months. Although we remain agnostic as to the overall sufficiency of better disclosure policy to "remedy" payday borrowing, we cast the 11% reduction in borrowing in light of the relative low cost of this policy.
Seeking Lasting Enjoyment with Limited Money TULLY, STEPHANIE M.; HERSHFIELD, HAL E.; MEYVIS, TOM
The Journal of consumer research,
06/2015, Letnik:
42, Številka:
1
Journal Article
Recenzirano
Consumers with limited discretionary money face important trade-offs when deciding how to spend it. In the current research, we suggest that feelings of financial constraint increase consumers’ ...concern about the lasting utility of their purchases, which in turn increases their preference for material goods over experiences. The results of seven studies confirm that the consideration of financial constraints shifts consumers’ preferences toward material goods (rather than experiences), and that this systematic shift is due to an increased concern about the longevity of the purchase. This preference shift persists even when the material goods are more frivolous than the experiences, indicating that the effect is not driven by an increased desire for sensible and justifiable purchases. However, the shift toward material purchases disappears when the material good is unusually short lived, further implicating concern about longevity as the key driver of the effect. Finally, the consideration of financial constraints increases preference for material purchases even when the potential memories that experiences can provide are made explicitly salient. Together, these results indicate that financially constrained consumers spend their discretionary money on material purchases as a means of securing long-term consumption utility.
In this article, we review the literature on financial literacy, financial education, and consumer financial outcomes. We consider how financial literacy is measured in the current literature and ...examine how well the existing literature addresses whether financial education improves financial literacy or personal financial outcomes. We discuss the extent to which a competitive market provides incentives for firms to educate consumers or to offer products that facilitate informed choice. We review the literature on alternative policies to improve financial outcomes and compare the evidence with that on the efficacy and cost of financial education. Finally, we discuss directions for future research.
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