Financial Responsibility, Personality Traits and Financial Decision ...

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if respondents score high on financial literacy. This effect, however, weakens when considering the actual savings behavior instead. Based on a set of four questions that relate to actual saving behavior, only 23 percent of our savers actually exhibit financial planning and savings behavior. This observed savings behavior is stronger when income is higher, respondents are older and household size is modest. We find that when it comes to skills and interests, that savings behavior is stronger among the more financial literate and among those who are more financially interested. But this effect is mild when compared to the factors related to the respondents attitude and personality. Here we find that inclination to actually save money for later is strongest among the respondents with the strongest locus of control and the lowest scores on chance. Both psychometric constructs measure the extent to which respondents feel that they have control over their life and future. The stronger this feeling of control, the more they are willing to save, and the greater the financial responsibility taken. This is likely to be related to upbringing. We detect a link between parents and the savings behavior of their children. Respondents, whose parents have saved for their education, are more likely to grow up as savers themselves. Encouraging personal financial decision-making is a question of education and upbringing, but also on developing and forming policies, which encourage affirmative actions stemming from greater personal responsibility. The results in this paper provide strong evidence that financial decision making depends on the human element of the ability to take responsibility for ones own actions. As a society, and looking beyond the empirical results found here, encouraging behavior to enhance savings and retirement provision is more likely to be affective through the mechanism of self reliance and learning to take responsibility of ones own actions than purely through programs to develop financial knowledge alone. 20
References [1] Berman, A. and T. Hays, 1973, “Relation Between Belief in After-Life and Locus of Control, ” Journal of Consulting and Clinical Psychology 41, pp. 318. [2] Bernheim, Douglas (1995), “Do households appreciate their financial vulnerabil- ities? An analysis of actions, perceptions, and public policy, ” Tax Policy and Economic Growth, American Council for Capital Formation, Washington, DC, pp. 1-30. [3] Browning, M. and T.F. Crossley, 2001, “The Life-Cycle Model of Consumption and Saving, ” Journal of Economic Perspectives, 15, pp. 3-22. [4] Campbell, J., 2006, “Household finance, ” Journal of Finance 61, pp. 1553-1604. [5] Davis, J., 1983, Does Authority Generalize? “Locus of Control Perceptions in Anglo-American and Mexican-American Adolescents, ” Political Psychology 4, pp. 101-120. [6] Feather, N., 1975, “Values in ” Education and Society, New York: Free Press. [7] Fisher, I. 1930. “” The Theory of Interest. New York: MacMillan. [8] Friedman, M., 1957, “A theory of the consumption function. ” Princeton. Princeton U. Press. [9] Furnham, A. (1986). “Economic locus of control. ” Human Relations, 39(1), 2943. [10] Furnham, A. (1996). “Attitudinal correlates and demographic predictors of mone- tary beliefs and behaviors. Journal of organizational behavior. Volume (17), Issue 4. pp 375-388. 21
Page 1 and 2: Financial Responsibility, Personali
Page 3 and 4: decisions through their understandi
Page 5 and 6: literacy test are 38% more likely t
Page 7 and 8: for their retirement, and thereby r
Page 9 and 10: In total, the survey consists of 62
Page 11 and 12: e good at mathematics, and merely 1
Page 13 and 14: looked at in detail later, and is o
Page 15 and 16: striking are the low scores that we
Page 17 and 18: these two household demographics re
Page 19: savers, the only interaction effect
Page 23 and 24: [19] Modigliani, F., Brumberg,R., 1
Page 25 and 26: Table 1: Summary statistics Total s
Page 27 and 28: Table 3: Robustness test of savings
Page 29 and 30: Table 5: Logit regressions on obser
Page 31 and 32: % Savers 60 50 40 30 20 10 0 Male F
Page 33 and 34: - It is hard to find a good financi
Page 35 and 36: C Financial Literacy Mean Stdev Min
Page 37 and 38: 100% 80% 60% 40% 20% 0% > 1960 1945

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