Student Loan Decision Making: Experience as an Anchor

Porto, Nilton; Cho, Soo Hyun; Gutter, Michael S.

doi:10.1007/s10834-021-09773-5

Cited by 3 publications

(3 citation statements)

References 33 publications

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“…Framing in uences indebtedness based on the way in which debt contracts are presented (Caetano et al, 2019), causing the individual to make mistaken decisions due to the fact that the embedded interest does not materialize (Bauer et al, 2021). Finally, the anchoring bias causes people to anchor themselves in past experiences in order to take on current debts (Porto et al, 2021), which can negatively in uence the relationship between consumption and indebtedness.…”

Section: Discussionmentioning

confidence: 99%

Behavioral biases and personal indebtedness: a systematic literature review

Silva,

Costa,

Bortolon

2024

Preprint

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Objective The level of indebtedness of individuals has increased significantly in recent decades. The objective of this study was to analyze the scientific literature that evaluates the interrelationships between behavioral biases and personal indebtedness, with a view to investigating the intellectual structure of publications on the influence of behavioral biases on the level of personal indebtedness. Methodology Bibliometric analysis of scientific publications carried out until October 2023 in the "Web of Science" and "Scopus" databases and which analyze determinants of personal indebtedness from the perspective of behavioral sciences was used. Results The results reveal works with global and local relevance, how indebtedness has been discussed from a behavioral perspective and the main cognitive biases associated with it, research clusters that can serve as a reference for researchers, trends and research gaps in this field of knowledge, and that combining constructs from the field of behavioral sciences with other areas of knowledge, especially education/knowledge and psychology/behavior, tends to expand the literature related to personal indebtedness. Originality Based on the content analysis of the articles, an innovative scheme illustrating the possible definitions of indebtedness from an economic and psychological perspective is presented, which is an important contribution to the literature.

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Section: Discussionmentioning

confidence: 99%

Behavioral biases and personal indebtedness: a systematic literature review

Silva,

Costa,

Bortolon

2024

Preprint

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“…Studies also show the important role of family socioeconomic status on life satisfaction of adolescents (Chen et al , 2018). Considering the important role of parental education on finances, studies document that young adults’ financial behavior is influenced by their parents’ educational level and household income along with parental socioeconomic status (Porto et al , 2021; Shim et al , 2009; Tang, 2015).…”

Section: Conceptual Framework Literature Review and Hypothesesmentioning

confidence: 99%

Parental financial socialization and life satisfaction of college students: mediation and moderation analyses

Mahapatra,

Xiao,

Mishra

et al. 2023

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Purpose This study aims to examine the association between parental financial socialization and life satisfaction and the mediating roles of desirable financial behavior in the association between parental financial socialization and life satisfaction of college students in India. Furthermore, this research also explores the moderating effects of parents’ socioeconomic characteristics (education, income and professions) in the association between parental financial socialization and desirable financial behavior. Design/methodology/approach A sample of 1,161 college students was collected in India. Parental financial socialization is measured by direct parental teaching in this study. The first stage moderated mediation model is performed to examine the direct and indirect effects through financial behavior of parental financial on life satisfaction as well as the moderating role of parents’ socioeconomic characteristics. Findings The mediation analysis shows that parental direct teaching is positively associated with young adults’ financial behavior, which in turn contributes to their life satisfaction. Furthermore, this study also finds negative moderation effects of parental education on the association between parental direct teaching and children's financial behavior. Originality/value This study extends the knowledge of family financial socialization in the context of India. Moreover, it examines the mediation roles of desirable financial behavior in the association between parental direct teaching and children’s life satisfaction. Furthermore, this paper explores the potential influence of parents’ education, income and professions on children’s financial behavior and life satisfaction.

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“…group, the mean amount borrowed was about $500). On the other hand, Porto et al (2021) also explored the possibility of the anchor effect in student loan borrowing decisions by showing that survey participants were influenced by their own postsecondary experience (or lack thereof) in determining whether and how much young adults should take out student loans in a hypothetical scenario. Porto et al (2021) used a sample of nearly 2000 American adults (18-64 years of age) to test the hypothesis that the loan amount experience matters on the amount recommended; data were collected through an online survey in 2014.…”

Section: Introductionmentioning

confidence: 99%

Debiasing the availability heuristic in student loan decision-making

Salas-Velasco

2024

Empirica

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The availability heuristic is a cognitive bias that affects various aspects of decision-making, including financial decisions. Based on a randomized controlled experiment, this study assesses the effectiveness of a debiasing treatment designed to prevent the effect of the availability heuristic in student loan decision-making. Experimental subjects were explained that there is a bias that may affect the decision of whether or not to pursue a master’s degree and take out a graduate loan to finance it, and they were recommended to base their decision on reliable and verified sources of information as well as expert advice. This specific debiasing strategy is tested empirically. Specifically, this study shows positive causal effects of the debiasing intervention on two indices of student loan decision-making, which were constructed as summary indicators of student loan debt attitude, the perception that significant referents approve the student loan indebtedness, financial self-efficacy in student loan decision-making, and graduate loan borrowing intention. The article highlights the need for higher education institutions seeking to make financial education effective to be concerned with reporting on (and raising awareness of) psychological factors that are present in making financial decisions as well.

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Student Loan Decision Making: Experience as an Anchor

Cited by 3 publications

References 33 publications

Behavioral biases and personal indebtedness: a systematic literature review

Behavioral biases and personal indebtedness: a systematic literature review

Parental financial socialization and life satisfaction of college students: mediation and moderation analyses

Debiasing the availability heuristic in student loan decision-making

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