Essays on Saving Behavior

TitleEssays on Saving Behavior
Publication TypeThesis
Year of Publication2013
AuthorsMotika, M
AdvisorNeumark, D
Number of Pages104
Date Published2013
UniversityUniversity of California, Irvine
CityIrvine, CA
Thesis TypePh.D.
Accession Number1413316840
KeywordsConsumption and Savings, Health Conditions and Status, Methodology, Net Worth and Assets

This dissertation combines three projects studying saving behavior. The first chapter presents a model of reference-dependent retirement saving behavior using a gain-loss utility function drawn from prospect theory. I show that this model predicts empirical characteristics of retirement saving behavior including adherence to defaults, under-saving, and the positive correlation between saving rates and financial knowledge. An additional testable implication of the model is that more financially-knowledgeable individuals will have wider variance than people with low financial knowledge. Using data from the Health and Retirement Study, I show that this implication is also supported by empirical results. The second chapter investigates the effects of financial training and planning on saving in a laboratory experiment. Subjects choose when to use tokens to watch video clips over the course of a 50-minute session. Boredom encourages subjects to use tokens immediately, while increased video length in later rounds creates an incentive to use them later. Subjects who receive minimal instructions tend to use their tokens early. Intensive training increases saving rates. The planning treatment has no effect on low-training subjects, but leads intensively trained subjects to smooth tokens across the five rounds rather than spending early or waiting until the end. Evidence from correlations between spending tokens early and high elicited discount rate, as well as subjects' comments about struggling to wait before using tokens, provide support for the external validity of this experiment design. The third chapter examines the relationship between `Big 5' personality traits and low saving rates. Several traits are shown to predict under-saving, with low conscientiousness being particularly important and robust. I then investigate whether personality traits also explain the effects of education, financial literacy, and financial planning. This might occur if certain personality types tended to participate in these activities and also tended to save. I find that the effects of education and financial literacy are robust to personality. The influence of financial planning might be explainable by personality-based selection.


Copyright - Copyright ProQuest, UMI Dissertations Publishing 2013 Last updated - 2014-01-23 First page - n/a

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Short TitleEssays on Saving Behavior
Citation Key6018