Exploring Association between Self-Reported Financial Status and Economic Preferences Using Experimental Data
Abstract
:1. Introduction
2. Description of the Experiment
2.1. Recruitment Strategy
2.2. Experimental Task
2.3. Financial Literacy Test
2.4. Ethics
3. The Empirical Model
4. Results
5. Conclusions
Supplementary Materials
Author Contributions
Funding
Institutional Review Board Statement
Informed Consent Statement
Data Availability Statement
Acknowledgments
Conflicts of Interest
Appendix A. Data Appendix
Variable | Mean | Standard Deviation | 95% Confidence Interval | Sample (n) |
---|---|---|---|---|
Age (years) | 22.22 | 0.12 | 22.04–22.50 | 193 |
Rand amount held (ZAR) | 1490.11 | 241.17 | 1016.68–1963.55 | 193 |
Safe choices (risk aversion) | 4.62 | 0.08 | 4.46–4.79 | 772 |
Impatient choices | 5.97 | 0.11 | 5.74–6.19 | 772 |
Financial literacy score (%) | 40.05 | 0.04 | 38.90–41.20 | 193 |
Very broke | 0.18 | 0.01 | 0.14–0.20 | 772 |
Broke | 0.52 | 0.02 | 0.49–0.56 | 772 |
Female | 0.53 | 0.02 | 0.49–0.56 | 193 |
Urban | 0.69 | 0.02 | 0.65–0.72 | 193 |
Covariate | Partial Correlation | Semi-Partial Correlation | Partial Correlation Squared | Semi-Partial Correlation Squared | p-Value |
---|---|---|---|---|---|
Financial literacy | 0.1648 | 0.1619 | 0.0272 | 0.0262 | 0.0000 |
Impatience | −0.0327 | −0.0317 | 0.0011 | 0.001 | 0.0001 |
Risk aversion | −0.036 | −0.0349 | 0.0013 | 0.0012 | 0.0000 |
Gender (female) | 0.0768 | 0.0746 | 0.0059 | 0.0056 | 0.0000 |
Age | 0.0017 | 0.0017 | 0.0000 | 0.0000 | 0.8362 |
Location (urban) | 0.0214 | 0.0207 | 0.0005 | 0.0004 | 0.0109 |
Rand Amount held | 0.1361 | 0.1331 | 0.0185 | 0.0177 | 0.0000 |
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Lottery A | Lottery B | Choose A or B | |
---|---|---|---|
Row | Payment in One Week | Payment in One Month and One Week | |
1 | R250 | R250 + 10% interest = R252.09 | A B |
2 | R250 | R250 + 20% interest = R254.20 | A B |
3 | R250 | R250 + 30% interest = R256.33 | A B |
4 | R250 | R250 + 40% interest = R258.47 | A B |
5 | R250 | R250 + 50% interest = R260.63 | A B |
6 | R250 | R250 + 60% interest = R262.81 | A B |
7 | R250 | R250 + 70% interest = R265.00 | A B |
8 | R250 | R250 + 80% interest = R267.22 | A B |
9 | R250 | R250 + 90% interest = R269.45 | A B |
10 | R250 | R250 + 100% interest = R271.70 | A B |
Lottery A | Lottery B | ||||||||
---|---|---|---|---|---|---|---|---|---|
Row | p | Rands | p | Rands | p | Rands | p | Rands | Choose A or B |
1 | 0.1 | 60 | 0.9 | 50 | 0.1 | 100 | 0.9 | 25 | A B |
2 | 0.2 | 60 | 0.8 | 50 | 0.2 | 100 | 0.8 | 25 | A B |
3 | 0.3 | 60 | 0.7 | 50 | 0.3 | 100 | 0.7 | 25 | A B |
4 | 0.4 | 60 | 0.6 | 50 | 0.4 | 100 | 0.6 | 25 | A B |
5 | 0.5 | 60 | 0.5 | 50 | 0.5 | 100 | 0.5 | 25 | A B |
6 | 0.6 | 60 | 0.4 | 50 | 0.6 | 100 | 0.4 | 25 | A B |
7 | 0.7 | 60 | 0.3 | 50 | 0.7 | 100 | 0.3 | 25 | A B |
8 | 0.8 | 60 | 0.2 | 50 | 0.8 | 100 | 0.2 | 25 | A B |
9 | 0.9 | 60 | 0.1 | 50 | 0.9 | 100 | 0.1 | 25 | A B |
10 | 1 | 60 | 0 | 50 | 1 | 100 | 0 | 25 | A B |
Model | Dependent Variable | Independent Variables | Control Variables |
---|---|---|---|
1 | Financial status: very broke (0/1) | Time preferences choices (impatience) | Financial literacy; amount held as cash or in bank account; gender; age; location; game |
2 | Financial status: very broke (0/1) | Risk preference choices (risk aversion) | Financial literacy; amount held as cash or in bank account; gender; age; location; game |
3 | Financial status: broke (0/1) | Time preferences choices (impatience) | Financial literacy; amount held as cash or in bank account; gender; age; location; game |
4 | Financial status: broke (0/1) | Risk preference choices (risk aversion) | Financial literacy; amount held as cash or in bank account; gender; age; location; game |
Financial Status I: Very Broke | Financial Status II: Broke | |||
---|---|---|---|---|
Model 1 | Model 2 | Model 3 | Model 4 | |
Δ Risk aversion | 0.0021 | −0.0059 | ||
(0.031) | (0.024) | |||
Mean: Risk aversion | 0.069 *** | 0.023 *** | ||
(0.005) | (0.005) | |||
Δ Impatience | 0.012 | −0.0036 | ||
(0.011) | (0.009) | |||
Mean: Impatience | 0.075 *** | −0.040 | ||
(0.017) | (0.035) | |||
Financial literacy | −0.084 *** | −0.084 *** | 0.0085 *** | 0.0076 *** |
(0.001) | (0.000) | (0.000) | (0.000) | |
Ln (amount held in Rand) | −0.13 *** | −0.14 *** | −0.16 *** | −0.16 *** |
(0.003) | (0.000) | (0.004) | (0.000) | |
Female | −0.13 *** | −0.15 *** | −0.21 *** | −0.23 *** |
(0.007) | (0.005) | (0.005) | (0.004) | |
Age | −0.079 *** | −0.083 *** | 0.027 *** | 0.021 *** |
(0.003) | (0.001) | (0.001) | (0.001) | |
Urban | −0.28 *** | −0.28 *** | −0.15 *** | −0.13 *** |
(0.007) | (0.004) | (0.005) | (0.003) | |
Game 2 (time/risk) | 0.026 *** | 0.00040 | −0.017 | −0.00061 |
(0.006) | (0.004) | (0.014) | (0.003) | |
Game 3 (time/risk) | 0.023 *** | 0.0029 | −0.013 | 0.0026 |
(0.005) | (0.007) | (0.011) | (0.004) | |
Game 4 (time/risk) | 0.023 *** | 0.0033 ** | −0.014 | 0.0017 *** |
(0.005) | (0.002) | (0.012) | (0.000) | |
Constant | 2.11 *** | 2.39 *** | 0.63 *** | 0.41 *** |
(0.082) | (0.004) | (0.239) | (0.008) | |
N | 756 | 756 | 756 | 756 |
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Mudzingiri, C.; Guvuriro, S.; Gomo, C. Exploring Association between Self-Reported Financial Status and Economic Preferences Using Experimental Data. J. Risk Financial Manag. 2021, 14, 243. https://doi.org/10.3390/jrfm14060243
Mudzingiri C, Guvuriro S, Gomo C. Exploring Association between Self-Reported Financial Status and Economic Preferences Using Experimental Data. Journal of Risk and Financial Management. 2021; 14(6):243. https://doi.org/10.3390/jrfm14060243
Chicago/Turabian StyleMudzingiri, Calvin, Sevias Guvuriro, and Charity Gomo. 2021. "Exploring Association between Self-Reported Financial Status and Economic Preferences Using Experimental Data" Journal of Risk and Financial Management 14, no. 6: 243. https://doi.org/10.3390/jrfm14060243
APA StyleMudzingiri, C., Guvuriro, S., & Gomo, C. (2021). Exploring Association between Self-Reported Financial Status and Economic Preferences Using Experimental Data. Journal of Risk and Financial Management, 14(6), 243. https://doi.org/10.3390/jrfm14060243