Locus of Control and Savings

Cobb‐Clark, Deborah A.; New, Sonja C. de; Sinning, Mathias

doi:10.2139/ssrn.2366519

Cited by 10 publications

(10 citation statements)

References 70 publications

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“…() additionally observe that a positive personal experience with annuities/stocks increases the demand for the respective investment, while Cobb‐Clark et al. () find that individuals with an internal locus of control tend to hold more pension wealth . Finally, Goedde‐Menke et al.…”

Section: Three Aspects Of Annuitization Decisionsmentioning

confidence: 99%

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What Do We Know About Annuitization Decisions?

Alexandrova¹,

Gatzert²

2019

Risk Manage Insurance Review

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Against the background of aging societies and increasing life expectancies, the protection of individuals from outliving their savings has become increasingly relevant. Annuities represent insurance against longevity risk and can prevent old‐age poverty. The aim of this article is to present the current state of theoretical, empirical and experimental evidence with regard to annuitization decisions. Toward this end, we conduct a systematic literature review that includes 89 articles. Based on this, we study welfare effects of mandatory annuitization, annuitization rates and the optimal fraction of wealth to be annuitized, as well as determinants of retirees’ choice to annuitize and their impact on annuity demand. Finally, we present possible solutions for overcoming the low uptake of annuities based on its causes. One main result is that behavioral biases in annuitization decisions particularly require considerably more theoretical research and empirical evidence, and that theoretical models already appear to well explain empirically observed annuitization rates.

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Section: Three Aspects Of Annuitization Decisionsmentioning

confidence: 99%

“…Locus of control is a concept that describes the attitude of an individual regarding the outcomes of her own behavior on life events (Cobb‐Clark et al., , p. 113). A person with an internal locus believes that she can control her life, whereas the external locus means that life is believed to be determined by external factors.…”

mentioning

confidence: 99%

What Do We Know About Annuitization Decisions?

Alexandrova¹,

Gatzert²

2019

Risk Manage Insurance Review

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“…Cobb‐Clark et al . (), for example, show that locus of control is linked to savings (those who believe that they can control relevant aspects of life save more). Extroversion has been linked to short‐term investing, neuroticism has been linked to risk aversion, openness to experience has been linked to long‐term investing, and conscientiousness has been linked to saving (for a review of the personality and finance literature see Killins, ).…”

Section: Previous Researchmentioning

confidence: 99%

Understanding the Gender Gap in Financial Literacy: Evidence from Australia

Preston

Wright

2019

Economic Record

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Using micro‐data from the Household, Income and Labour Dynamics in Australia Survey, and the Oaxaca–Blinder decomposition technique, this paper examines the determinants of the gender gap in financial literacy. The analysis suggests that human capital variables, such as age and education, are not important in explaining the gender gap in financial literacy. Labour market variables, such as sector, occupation, industry, union membership and labour market status, are important and explain around 16 per cent of the gap. This finding is dependent on the assumption that these variables are exogenous. There is a large unexplained gap, suggesting that the main determinants are neither human capital nor labour market factors.

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“…Studies in this area have shown that people who have internal locus of control tend to invest more in human capital accumulation than people with an external locus of control, because the former’s expected return to human capital investment is higher (Coleman and DeLeire, 2003). 1 People with internal locus of control also tend to live a healthier lifestyle through healthier diets and exercise (Cobb-Clark et al, 2014), save more money for “rainy days” (Cobb-Clark et al, 2013), invest more time to stimulate cognitively their children (Lekfuangfu et al, 2014), and hold riskier assets (Salamanca et al, 2013). Another interesting and important property of internal locus of control is grit or perseverance in the face of adversity.…”

Section: Introductionmentioning

confidence: 99%

Can having internal locus of control insure against negative shocks? Psychological evidence from panel data

Buddelmeyer

Powdthavee

2016

Journal of Economic Behavior & Organization

113

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We investigate whether the intensity of emotional pain following a negative shock is different across the distribution of a person’s locus of control – the extent to which individuals believe that their actions can influence future outcomes. Using panel data from Australia, we show that individuals with strong internal locus of control are psychologically insured against own and others’ serious illness or injury, close family member detained in jail, becoming a victim of property crime and death of a close friend, but not against the majority of other life events. The buffering effects vary across gender. Our findings thus add to the existing literature on the benefits of internal locus of control.

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Locus of Control and Savings

Cited by 10 publications

References 70 publications

What Do We Know About Annuitization Decisions?

What Do We Know About Annuitization Decisions?

Understanding the Gender Gap in Financial Literacy: Evidence from Australia

Can having internal locus of control insure against negative shocks? Psychological evidence from panel data

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