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Mental Accounting Psychology and Life Cycle Economics: Who Saves, Who Doesn't and How to Tell the Difference

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Mental Accounting Psychology and Life Cycle Economics: Who Saves, Who Doesn't and How to Tell the Difference University of New Hampshire University of New Hampshire Scholars' Repository Doctoral Dissertations Student Scholarship Spring 2004 Mental accounting psychology and life cycle economics: Who saves, who doesn't and how to tell the difference Thomas James Van De Water IV. University of New Hampshire, Durham Follow this and additional works at: https://scholars.unh.edu/dissertation Recommended Citation Van De Water, Thomas James IV., "Mental accounting psychology and life cycle economics: Who saves, who doesn't and how to tell the difference" (2004). Doctoral Dissertations. 220. https://scholars.unh.edu/dissertation/220 This Dissertation is brought to you for free and open access by the Student Scholarship at University of New Hampshire Scholars' Repository. It has been accepted for inclusion in Doctoral Dissertations by an authorized administrator of University of New Hampshire Scholars' Repository. For more information, please contact [email protected]. Ph.D. DISSERTATION MENTAL ACCOUNTING PSYCHOLOGY AND LIFE CYCLE ECONOMICS: WHO SAVES, WHO DOESN’T AND HOW TO TELL THE DIFFERENCE BY THOMAS JAMES VAN DE WATER IV BA SUNYGeneseo, 1992 MA University of New Hampshire, 1996 MBA University of New Hampshire, 1998 DISSERTATION Submitted to the University of New Hampshire In Partial Fulfillment of The Requirements for the Degree of Doctor of Philosophy In Psychology May, 2004 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. UMI Number: 3132801 Copyright 2004 by Van De Water, Thomas James, IV All rights reserved. INFORMATION TO USERS The quality of this reproduction is dependent upon the quality of the copy submitted. Broken or indistinct print, colored or poor quality illustrations and photographs, print bleed-through, substandard margins, and improper alignment can adversely affect reproduction. In the unlikely event that the author did not send a complete manuscript and there are missing pages, these will be noted. Also, if unauthorized copyright material had to be removed, a note will indicate the deletion. UMI UMI Microform 3132801 Copyright 2004 by ProQuest Information and Learning Company. All rights reserved. This microform edition is protected against unauthorized copying under Title 17, United States Code. ProQuest Information and Learning Company 300 North Zeeb Road P.O. Box 1346 Ann Arbor, Ml 48106-1346 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. ALL RIGHTS RESERVED ©2004 Thomas James Van De Water Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. This dissertation has been examined and approved. Dissertation Director, Ellen S. Cohn Professor of Psychology 0 1 A y iX Victor Benassi Professor of Psychology (jQnjxrJtny Rebecca Warner Professor of Psycholoj Andrew Smith Director of the UNH Survey Center Stephen Ciccone Assistant Professor of Accounting and Finance 5 '//3 /o V Date Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. This dissertation is dedicated to: Thomas and Carol, my parents, who motivated me to begin a Ph.D. and Alyson, my wife, who motivated me to finish IV Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. ACKNOWLEDGEMENTS I would like to thank Ellen Cohn for her diligent and consistent efforts on my behalf over the past ten years. Without your help and guidance this would not have been possible. The input of my committee members: Victor Benassi, Becky Warner, Andy Smith and Stephen Ciccone, who provided equal parts insight and patience, has also proven invaluable. Finally, I would like to recognize the University of New Hampshire for providing the opportunity, and teaching fellowship support, to study in Durham, NH. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. TABLE OF CONTENTS DEDICATION........................................................................................................ iv ACKNOWLEDGEMENTS.....................................................................................v LIST OF TABLES...................................................................................................vii LIST OF FIGURES................................................................................................. ix ABSTRACT.............................................................................................................x CHAPTER PAGE WTRODUCTION................................................................................................... I I. SAVING DECISIONS: PSYCHOLOGY AND ECONOMICS..........................2 Decision Making Models: Increasingly Subjective .......................................... 4 Economic Models of Saving Decisions: Life Cycle ......................................... 10 Psychological Models of Saving Decisions: Mental Accounting .....................20 Separating Who Saves From Who Does Not ....................................................31 Research Question .............................................................................................34 II. STUDY 1.............................................................................................................37 Method ............................................................................................................. 38 Results............................................................................................................... 44 III. STUDY 2........................................................................................................... 83 Method ...............................................................................................................86 Results............................................................................................................... 100 IV. GENERAL DISCUSSION................................................................................ 130 REFERENCES.........................................................................................................140 APPENDICES..........................................................................................................150 vi Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. LIST OF TABLES TABLE PAGE Table 1................................................................................................................................ 35 Life Cycle and Mental Accounting Profiles of When and How Saving Occurs Table 2................................................................................................................................ 40 Demographic Profiles of Interview Participants Tables................................................................................................................................ 42 Sources for Interview Questions Table 4................................................................................................................................ 46 Participant Age, Marital Status, Education and Children Frequencies Tables................................................................................................................................ 47 Saving Habits, Spending, Time Horizon and Risk Tolerance Frequencies Table 6................................................................................................................................ 49 Reasons for Saving Frequencies Table?................................................................................................................................ 50 Financial Luck and Perceived Future Obligation Frequencies Tables................................................................................................................................ 51 Saving and Investment Information Source Frequencies Table 9 ................................................................................................................................ 53 Saving Definition, Saving vs. Investing, Saving Attribution Frequencies Table 10............................................................................................................................... 54 Moral Saving Obligation, Why Others Save or Do Not Save Frequencies Table 11............................................................................................................................... 56 Past Saving and Saving Planning Frequencies Table 12............................................................................................................................... 57 Saving Strategy Frequencies Table 13............................................................................................................................... 58 Personal Saving Influences and Influence of Risk Frequencies Table 14............................................................................................................................... 59 Changes in Saving Approach Frequencies Table 15............................................................................................................................... 89 Structure of the Survey of Consumer Finances vii Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. Table 16............................................................................................................................... 90 Life Cycle Variables
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