Three Essays on a Scarcity Mindset and Procrastination in Consumer Decision-making

Behavioral economics has sought to find explanations for anomalous behavior that deviates from the rational behavior predicted by the standard economic model (Mullainathan & Thaler, 2000). This dissertation presents three studies that explore such explanations for consumer behavior specifically the ownership of cryptocurrencies, the use of alternative financial services, and procrastination in relation to the delay or avoidance of dental health care. The first study uses the scarcity mindset as put forth by Mullainathan and Shafir as the framework to analyze cryptocurrency holdings among a sample of U.S. investors (Mullainathan & Shafir, 2013). The study uses responses from the FINRA 2021 National Financial Capability Study (NFCS) and related Investor Survey (N=2,364). It uses a proxy for a scarcity mindset along with other predictor variables including financial literacy, investment literacy, subjective financial knowledge, and willingness to take financial risk, along with demographic and socioeconomic variables, to explain the holding of cryptocurrency. Results show a direct and positive association between cryptocurrency investing and a scarcity mindset, beyond established predictors of investment behavior (OR=1.140, SE=0.024, p<.001). The findings held for a sample of pre-COVID-19 survey data from FINRA’s 2018 surveys (N=1,634). In the 2018 data, the scarcity mindset was significantly and positively associated with cryptocurrency investing (OR=1.156, SE=0.037, p<.001). The scarcity mindset associated with speculative behavior is both of societal concern and has practical implications as it relates to asset allocation, investments, and retirement planning. The second study broadens the investigation of the scarcity mindset to the analysis of the use of alternative financial services (AFS), such as payday loans, among a broad sample of the U.S. population. The study uses responses from the FINRA 2021 State by State Survey (N=24,349). As the main predictor variable, the study uses again the proxy scarcity mindset variable along with established predictor variables of alternative financial services use, including financial literacy, subjective financial knowledge, willingness to take financial risk, and difficulties in meeting monthly household expenses, along with demographic and socioeconomic variables, to explain the use of alternative financial services. The empirical findings in this study show a positive association between alternative financial services usage and a strong scarcity mindset (OR=1.100, SE=0.007, p<.001), controlling for the other established predictor variables. The findings in this study suggest that behavioral mechanisms are significant in helping explain costly financial mistakes. An extension within the study shows that even after stratifying respondents by income, the scarcity mindset is significantly related to an increase in alternative financial services usage across income groups. Understanding the scarcity mindset in this broader context is important for consumer financial well-being, especially considering new products, such as buy now, pay later, being created and marketed to consumers. The third study uses procrastination as a predisposing factor within the framework of Andersen’s Behavioral Model for Health Services Utilization to analyze dental health care behavior (Andersen, 1968; Andersen, 1995). The study uses the 2020 Health and Retirement wave linked to responses by a subsample from the core survey in Experimental Module 2 – Long Term Health Care Procrastination (N=1,217) (Health & Study, 2020). The study uses a procrastination score derived from subsample survey questions that reflect Steel’s Pure Procrastination Scale (Steel, 2010). The empirical findings show that procrastination is significantly and negatively associated in relation to having visited the dentist in the past two years from the time of the 2020 survey (Coefficient=-0.017, SE=0.006, p=.006), after controlling for having dental coverage as well as socioeconomic and demographic factors. As an extension, since the Health and Retirement survey is longitudinal, this study uses 2018 dental visit responses linked to the 2020 procrastination scores of the subsample respondents, and found temporal stability consistent with previous studies (Steel, 2007). As a robustness check, the study examined other 2020 health care behaviors, such as a flu shot and mammogram screening, and found that aversive tasks were significantly and negatively associated with procrastination. These findings are important to researchers and to policymakers as it pertains to healthy and proactive consumer decision-making.