Modeling behavioral aspects of the intent to save: findings of a cross-sectional study in Pakistan  

Oleh:

Akhtar, Syed Toqueer ; Zia, Faiza

Jenis: Article from Proceeding
Dalam koleksi: SIBR-Thammasat 2014 Conference on Interdisciplinary Business & Economics Research June 5th- 7th, 2014 di Emerald Hotel Bangkok, page 1-3.
Topik: External and internal locus of self-control; Probit Model; Logistic Model; impulse spending instinct
Fulltext: b14-164.pdf (20.43KB)

Isi artikel

Theories such as Life-Cycle Hypothesis and Permanent-Income Hypothesis have dominated the economic literature on saving behavior since a long time. However, these theories largely neglect the essential role that personality traits such as self-contentment, impulse spending intent and self-control play in determining saving decisions of individuals. These behavioral factors may better explain the intent to save because unlike LCH and PIH, which are based on the assumptions of rationality and decision-making over lifetime, attitudes and behavior can cause individuals to save more or less depending on how they perceive future and what their outlook towards life is. This paper uses cross-sectional data and incorporates behavioral factors such as locus of self-control and risk preference as well as attitudinal variables such as self-contentment in the model to investigate the linkage which shapes saving decisions of individuals. Intent of saving has been observed to change as respondents’ perception, contentment and self-control changes. A questionnaire has been conducted which includes questions based on personality and self-control assessment, measured using ordinal scale. Results are devised using the Probit Model and Logistic Model where the variables have been interpreted using average marginal effects. It has been revealed that individuals who have external locus of self-control are less likely to save more while individuals who have an internal locus of self-control are expected to be high savers. Likewise, people who have comparatively more self-contentment are high savers and this has been considerably backed up by literature. Moreover, considering the high consumption patterns in Pakistan, it has been observed that people who have high impulse spending instinct are low savers as compared to those people who prefer saving over spending and who have foreseeable 2 expenditure in the future. The study further reveals that risk preference plays a crucial role in saving decisions as people who are risk-averse tend to save more.

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