Do optimists plan for retirement? A behavioural explanation for non-participation in pension schemes

Balasuriya, Jiayi; Gough, Orla; Vasileva, Kristina

doi:10.1016/j.econlet.2014.10.012

Cited by 10 publications

(7 citation statements)

References 11 publications

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“…We predicted that the effectiveness of financial literacy messages among Arab consumers would be driven by financial optimism. While optimism is formally defined as generalized positive expectations about future events (Weinstein, 1980), financial optimism refers to positive expectations about desired outcomes in the domain of personal finance (Balasuriya et al, 2014; Puri & Robinson, 2007). Research suggests that optimistic biases may vary across situations (Weinstein, 1980) and foster poor financial decisions by leading individuals to overestimate (underestimate) the probability that favorable (unfavorable) outcomes will occur.…”

Section: Hypotheses Developmentmentioning

confidence: 99%

How materialism shapes the effectiveness of financial literacy messages: A cross‐cultural perspective

Khenfer

2022

Applied Psychology

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This cross-cultural experiment (N = 1,000) shows that messages designed to promote financial literacy are differently effective among U.S. and Arab consumers depending on the salience of materialistic thoughts at the time of exposure. Among U.S. consumers, financial literacy messages increased savings intention by heightening the importance of saving when materialistic thoughts were salient but had no impact otherwise. This is consistent with existing research which has largely focused on WEIRD countries (Western, Educated, Industrial, Rich, Democratic; Henrich, Heine, & Norenzayan, 2010). However, among Arab consumers (data collected in the United Arab Emirates), we found that financial optimism was a key construct to explain savings behaviors. Specifically, our results show that financial literacy messages lower levels of financial optimism, and thus, increase savings intention at baseline levels. When materialistic thoughts are salient, our results suggest that Arab consumers prefer spending in the presence of financial literacy messages because having materialistic thoughts heightens financial optimism when one is assured that acquiring financial knowledge and skills guarantees one's financial success.

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Section: Hypotheses Developmentmentioning

confidence: 99%

How materialism shapes the effectiveness of financial literacy messages: A cross‐cultural perspective

Khenfer

2022

Applied Psychology

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“…The results from such an investigation can point towards investor learning being a “hidden” variable that influences the persistence of the anomaly. An alternative means of incorporating behavioural biases is through the use of surveys that gather primary data (such as Balasuriya et al , 2014). The above-mentioned authors examine whether financial optimism impacts the choice to invest in a retirement fund using the British Household Panel Survey (BHPS) data.…”

Section: Literature Reviewmentioning

confidence: 99%

Investigating the low-risk anomaly in South Africa

Seetharam

2021

RBF

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PurposeRecent studies have shown that low-volatility shares outperform high-volatility shares. Given the conventional finance theory that risk drives return, this study aims to investigate and attempt to explain the presence of the low-risk anomaly (LRA) in South Africa.Design/methodology/approachUsing share prices from 1990 to 2016, various buy-and-hold strategies are constructed to determine the return to an investor attempting to capitalise on such an anomaly. These strategies involve combinations relating to a price filter, the calculation of risk and volatility, value-weighting or equal-weighting of portfolios and the window period to construct said portfolios.FindingsIt was found that the LRA exists on the Johannesburg Stock Exchange (JSE_=) when using univariate sorts, without controlling for the size or value effect. When using multivariate portfolio sorts (size and volatility or value and volatility), it was found that the LRA does not exist on the JSE under the majority of risk proxies, but particularly prevalent when downside risk is used. This loosely points towards a potential “inverse momentum” effect where low-return portfolios outperform their counterparts.Originality/valueIn general, it is established that the risk–return relationship is non-linear and deterministic under traditional proxies, but improves to being somewhat, but not completely, linear under a Kalman filter. The Kalman filter, which can be considered a proxy for learning, does not remove the anomaly in its entirety, indicating that behavioural approaches are needed to explain such phenomena.

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“…The result of this work were the defining of the conditions for the public pension fund to function, where the second pillar pension scheme seems optimal, in addition to a specific solution that contains an actuarial model of the functioning of the regional pension fund. And in order to analyse the relationship between financial optimism and non-participation in pension schemes, the authors of [45] explains that financial optimism reduces the probability of employees joining employer run pension schemes and also the probability of the self-employed subscribing to private pension plans. Their research suggests that both employed and self-employed individuals who are financially optimistic could face the very negative consequences of pension shortfall and low pensions income when they retire.…”

Section: Retirement Fieldmentioning

confidence: 99%

Performance analysis model for service supply chains : case of the retirement supply chain

Mezouar

Afia

2018

IJET

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A service supply chain (SSC) is a supply network that transfers resources into services with or without physical products, to satisfy cus-tomer needs. So it’s evident that without offering the right service at the right time to the right person, the service is incomplete, inconsistent and ineffective. In the same context, the retirement field faces the challenge of offering the correct pension to the right pensioner the first month of his retirement. This paper approaches this challenge from a SSC perspective as a case study for dealing with continuity in service supply chain. It uses a methodology that combine Analysis-Specification-Design-Implementation (ASDI), Office Support Systems Analy-sis and Design (OSSAD), Business Process Management (BPM), and Supply Chain Operations Reference (SCOR). It analyzes and mod-els the Moroccan retirement SSC, simulates the behavior of "the management of civil pension rights" process, and proposes a set of Key Performance Indicators (KPI) to evaluate the continuity in the service supply chain. Hence, this work provides guidance on the performance analysis of a SSC.

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Do optimists plan for retirement? A behavioural explanation for non-participation in pension schemes

Cited by 10 publications

References 11 publications

How materialism shapes the effectiveness of financial literacy messages: A cross‐cultural perspective

How materialism shapes the effectiveness of financial literacy messages: A cross‐cultural perspective

Investigating the low-risk anomaly in South Africa

Performance analysis model for service supply chains : case of the retirement supply chain

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