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THE EFFECT OF MENTAL ACCOUNTING ON STUDENT’S INVESTMENT DECISIONS: A STUDY AT INVESTMENT GALLERY (GI) FEB UNIVERSITY OF BENGKULU AND SYARIAH INVESTMENT GALLERY (GIS) FEB IAIN BENGKULU
1Fitri Santi, 2Nelsi Valetta Sahara, 3Kamaludin 1.2.3 Fakultas Ekonomi dan Bisnis Universitas Bengkulu 1.2.3 Jl. Wr. Supratman, Kandang Limun, Muara Bangka Hulu,Bengkulu [email protected], [email protected], [email protected]
Abstrak Penelitian ini mencoba untuk mengeksplorasi fenomena keberadaan akuntansi mental (MA) antara investor di Galeri Investasi FEB Universitas Bengkulu dan investor di Galeri Investasi Syariah FEB IAIN Bengkulu, dan untuk menguji pengaruhnya terhadap keputusan investasi saham. Kami mengumpulkan data menggunakan kuesioner. Penelitian ini menggunakan analisis regresi linier sederhana untuk menguji hipotesis. Hasilnya menunjukkan bahwa investor memang memiliki MA. Rata-rata jawaban responden menunjukkan bahwa mereka memperlakukan uang bulanan dengan uang bonus berbeda dalam berinvestasi. Ketika menggunakan uang bulanan sebagai modal, mereka rata-rata menggunakan porsi kecil dari uang bulanan mereka untuk investasi, tetapi ketika modal adalah uang bonus mereka, maka mereka menggunakan lebih banyak porsi uang untuk investasi. Bagi responden, uang bulanan mereka jauh lebih penting daripada uang bonus, dan mereka juga lebih takut terhadap risiko ketika menginvestasikan uang bulanan daripada ketika menginvestasikan uang bonus, dan ketika ada kerugian, tingkat kerugian dari menginvestasikan uang bulanan lebih tinggi daripada tingkat kerugian penyesalan dari menginvestasikan uang bonus. Hasilnya menunjukkan MA ada di antara para investor, dan memang memiliki pengaruh yang signifikan terhadap keputusan investasi saham.
Kata kunci: Mental accounting (MA), stock investment decision
Abstract Our study tries to explore the existence of mental accounting (MA) phenomenon among the investors at Investment Gallery FEB University of Bengkulu and the investors at Sharia Investment Gallery FEB IAIN Bengkulu, and to test its influences on the stock investment decision. We collect data using questioner. This study uses simple linear regression analysis to test the hypothesis. The results show that investors do have the MA. The average respondents' answers indicate that they treat monthly money with bonus money differently in investing while using monthly money as the capital, they averagely use a smaller portion of their monthly money for investment, but when the capital is their bonus money, then they use more portion of the money for the investment. For the respondents, their monthly money is more important than the bonus money, and they are also more afraid of the risks of investing the monthly money than investing the bonus money, and when there is a loss, the regret level of losses from investing monthly money is higher than regret level of losses from investing bonus money. The result shows the MA exists among the investors, and have a significant effect on the stock investment decisions.
Keywords: Mental accounting (MA), stock investment decision
Santi, Sahara, Kamaludin, The Effect of Mental Accounting… 137 https://doi.org/10.35760/eb.2019.v24i2.1907 INTRODUCTION financial behavior of an individual Mental accounting (MA) is an (Nofsinger, 2001; H. Shefrin, 2002) economic concept established by Richard The integration of psychology into Thaler, which contends that individuals economics and finance literature led divide their current and future assets into prominent scholars, Daniel Kahneman and separate, non-transferable portions. It is a Amos Tversky, create prospect theory in psychological factor that makes individuals 1979. Prospect theory modeled how tends to divide their money into certain individuals make a choice between categories in their minds. The theory probabilistic alternatives where risk is mentions that individuals assign different involved and the probability of different levels of utility to each asset group, which outcomes is unknown. It earned Kahneman affects their consumption decisions and the Nobel Prize in Economics in 2002. other behaviors. Rather than rationally Prospect theory is an explanation of human perceiving every Rupiah as identical, MA decision making in a state of uncertainty helps explain why many investors assign outcome. This can be applied to situations some of their money as safety capital which ranging from life decisions such as they invest in low-risk investments, while changing careers or moving abroad, to at the same time treating their risk capital financial options such as choosing an quite differently. investment fund or deciding whether to buy Investments are the activities which insurance. Prospect theory suggests that include investing some resources to get people valued losses and gains differently, return in the future. Investments are and thus individuals make decisions based basically placing some fund today in on perceived gains instead of perceived expected to get profits in the future. It is losses. Also known as "loss-aversion" obvious that investors not only consider the theory, the general concept is that if two estimate of the prospects of investment choices are put before an individual, both instruments alone in their investment equal, with one presented in terms of behavior, but also involve psychological potential gains and the other in terms of factors in making their investment possible losses, the former option will be decisions. That is we start to uses the chosen. Prospect theory suggests that psychology science and financial science in humans are irrational decision makers. the effort to understand the financial Tversky and Kahneman proposed that behavior. Behavioral finance as a study of losses cause greater emotional impact on an how psychological phenomena affect the individual than does an equivalent amount of gain, so given choices presented two
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ways (with both offering the same result) – code, categorize, and evaluate economic an individual will pick the option offering outcomes by grouping their assets into any perceived gains. number of nonfungible Everyone in the world would certainly (noninterchangeable) mental accounts in be involved in the decision-making process. their mind (R. Thaler, 1980). A very This decision-making can take place in any rational person will never be exposed to this situation, starting from the simplest to the psychological bias, because mental most complex ones. Decision-making can accounting will cause a person to take occur in situations where one predicts irrational steps to place money differently future outcomes of the alternatives, and based on certain categories, such as how to then chooses one of two or more options, earn money (work, inheritance, gambling, and estimates the the probability of those bonuses, other) or the nature of the use of outcomes on the basis of mostly limited the money (recreation, necessities, etc.) evidence. (Pompian, 2006). People may have multiple When making investment decisions, mental accounts for the same kind of standard traditional theory in finance are resource. A person may use different relatively dominated by the expected utility monthly budgets for grocery shopping and theory. Expected utility theory assumes that dinning out at restaurants, for example, and individuals are rational decision makers, constrain one kind of purchase when its but they are often not rational when they budget has run out while not constraining make their choice (Robison, Shupp, & the other kind of purchase, even though Myers, 2010). There are many both expenditures draw on the same psychological factors, such as emotion, fungible resource (income) (Cheema & mood, psychological biases, ect that affect Soman, 2006). Similarly, supermarket the decision making process. Even shoppers spend less money at the market Kahneman and Tversky (1979) developed when paying with cash than with their debit Prospect Theory, in which there are factors cards (and credit cards), even though both such as regret aversion, loss aversion, and cash, debit and credit cards draw on the mental accounting that can affect one's same economic resource. Comparing the decision making process. price of goods to a smaller mental account In this study, the factor to be discussed (e.g., the cash in their wallet) than to a is mental accounting (MA). Mental larger mental account (e.g., the money in accounting was first created by the their bank accounts) increases the "pain of University of Chicago professor, Richard payment". Thaler. MA describes people’s tendency to
Santi, Sahara, Kamaludin, The Effect of Mental Accounting… 139 https://doi.org/10.35760/eb.2019.v24i2.1907 Mental accounting focuses on how a and the effects of MA on the investment person responds and evaluates a situation decisions. where there are two or more possible outcomes. Not only related to financial The Assumption of rationality and problems, mental accounting can also cover traditional financial theory human behavior widely. By understanding Financial theories are generally built mental accounting, people are expected to on the basis of various assumptions to understand the psychological processes clarify the position of the theory when underlying a person in making choices or faced with the real situation. Assumptions making economic and other decisions. are needed to enforce a theory to be readily We contribute to the literature by tested for implementation, and what providing empirical evidence on the happens if those assumptions are violated existance of MA and provide the further (Asri, 2013). Conventional financial theory evidence on it’s impact on the students has one important assumption that human investment decision. We administered beings in making decisions are rational. In questioners to 100 students as investors at general, it is known that some GI FEB University of Bengkulu and GIS characteristics of human rationality, among IAIN Bengkulu. We use descriptive others: always thinking before deciding, statistics and simple linear regression to test have preferences, able to choose the best the hypotesis. Our result show that the MA viewed alternative among the available exists amongst students in Bengkulu, and options, willing to pay attention to all the MA has a significant effect on information, and able to evaluate and investment decision of students in compare information. However, a person’s Bengkulu. rational way of thinking has some This paper is presented in the limitation or bounded, so it is called following sequence: the introduction, the bounded rationality. Bounded rationality is literature review and hypotheses happened whenever the decision makers are development, the reseach method, the bounded by the limited ability of their results and discussion, and conclusions. rationality by a number of limitations or obstacles when making decision and LITERATURE REVIEW making choices. In this session we will discuss the In facing uncertainty condition, assumption of rationality in traditional rational decision can be taken by using the finance theory, and the investment decision principle of expected value maximization. This concept is well known as expected
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utility theory. The expected utility theory dimension construct. It involves at least the related to choosing decision alternatives following dimensions: (1) How much rationally with emphasize that individual money to be invested, will we invest in has different behavior toward risk (Asri, small portion or large portion of our 2013). This theory is overly simplifying the money? (2) When will we invest? Do we reality, as it argue that a decision making is invest sooner or later? Do we take an merely defined by attitude toward risk. investment whenever we have much money, or whenever we thought that this is Investment decision and the effects of the best time to invest? (3) Investment mental accounting bias on investment decision involves decisions on what kind or decision. type of investments will we take. Is it Investments are activities which investment in real assets or financial assets, involved investing some resources to short term or long-term assets, or certain business in order to get returns or combination of them? (4) Investment profit in the future. Investment is placing decision also involves decisions about the some funds today in a business in expecting source of fund which will be invested. to get profit or return in the future. In order Initially, in making an investment to do investment activity in capital market decision, an investor not only uses the properly, an investor needs to have enough estimates of investment instruments knowledge, skills, and intuition about prospects, but also is influenced by business, to analyze which stock to buy or psychological factors. Investment analysis hold and which stock to be sold. Investor is which considers both the field of supposed to be rational in making stock psychology science and the field of finance purchasing decision. There are several science is known as behavioral finance. reasons of why do individuals invest, for Behavioral finance is a field of study in example: they pursue investment activity to finance which explores how individual is get a better future life, to reduce inflation behaving in financial settings. Specifically, risk, to get tax saving benefits. Basically, it studies how human psychology affects people pursue investment activity for the individual financial decision making, purpose of gaining or increasing their corporate decision making, and market wealth. behavior (Nofsinger, 2001; H. Shefrin, Bodie, Kane, and Marcus (2006) argue 2002). It is also an alternative approach in that there are two important aspects in studying how psychology aspects affect investment: the expected return and the individual investment decision making. risk. Investment decision is a multi-
Santi, Sahara, Kamaludin, The Effect of Mental Accounting… 141 https://doi.org/10.35760/eb.2019.v24i2.1907 In mental accounting concept it is (1) current income, (2) current assets, and assumes that individuals divides their (3) future income. The propensity to money into some certain accounts based on consume is greatest from the current its purposes. Thaler (1985) stated that income account, while future income is “mental accounting is the set of cognitive treated more conservatively. operation use by individuals and household There are three components in MA. to code, catagorize and evaluate financial (1) Individual captures how outcomes are activities.” Mental accounting describes felt and experienced, and how a decision is people’s tendency to code, categorize, and made and evaluated. (2) Mental accounting evaluate economics outcomes by grouping involves placing activities into certain their assets into any number of non- accounts. Both sources and uses of money fungible (non-interchangeable) mental should be grouped in some accounts accounts. As Pompian (2006, p. 171) states: mentally like an accounting system. (3) The “A complete rational person would never frequency of account evaluation, which succumb to this sort of psychological means each account can be noted or process because mental accounting causes evaluate daily, monthly, or yearly (R. subjects to take the irrational step of Thaler, 1985). treating various sums of money differently MA is a cognitive bias type, which based on where these sums are mentally refers to the coding, categorization, and categorized, for example the way that a evaluation of financial decisions. It is a certain sum has been obtained (work, psychological factor which measurement inheritance, gambling, bonus, etc.) or the has several goals. First, being a self- nature of the money’s intended use (leisure, controlling tool that causes people to think necessities, etc).” rationally to make good decisions (R. H. The concept of framing is useful in Thaler & Sunstein, 2008). The second is to mental accounting analysis. Individuals, help individual to see the financial due to heuristic thinking process, use problems better but inefficiently, so there is framing to process information. Their a possibility of conflict with both goals, and perspectives on money and investment consequently in an accurate representation usually are framed accordingly to the does not always make a person happy for a surrounding circumstances that they face short time (Prelec & Loewenstein, (H. M. Shefrin & Thaler, 1988). In Shefrin 1998). MA focuses on how a person and Thaler’s behavioral life-cycle theory responds and evaluates a situation where (1988), it is states that people mentally there are two or more possible outcomes. allocate wealth over three classifications: Not only related to financial problems, MA
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can also cover human behavior widely. By wrong with his investment, he does not feel understanding mental accounting, people very bad for that failed investment. are expected to understand the However, it will be different when the psychological processes underlying in money for investment is from his monthly making choices or making economic and salary. Although he loses money in the other decisions. same amount but he regrets more, because Mental accounting can be illustrated as they frame and categorize these two type follows. Suppose we have for example, a salaries differently and they place different civil servant (PNS) with a monthly salary weight for each of them. They fail to and the thirteenth salary. Every civil servant consider that money from monthly salary (PNS) gets a thirteenth salary, a salary and bonus salary are interchangeable or equal to one full monthly salary each year. fungible. For example, a civil servant (PNS) who is There are many previous studies about receiving a monthly salary of Rp.3.500.000, mental accounting. Barberis and Huang -., she/he usually restrict to use this (2001) conducted research on mental monthly salary for some certain purpose, accounting, loss aversion, and individual such as paying electricity bills, buying stock returns. They consider a form of MA foods, paying school fee for their kids, etc. as investors’ concern about return/gains Sometimes, not a single bit of the salary is and risk/losses of individual stock values, used for other purposes, for example let and investors’ concern about return/gains alone to have fun. It will be different and risk/losses of the overall portfolio whenever the money is come from his/her value. Those investment behaviors show thirteenth salary. He/she would spend them that investors who suspect to mental for shopping and leisure. They frame their accounting have two possible attitudes. money differently, between the monthly First, the attitude toward the risk preference salary and the thirteenth salary, because the which is either risk seeker, risk averter, or thirteenth salary is a bonus salary, so he can risk neutral. Second, return preference spend it just like that. where investors have certain preference to MA can also affect the investment accept return in the form of capital gain, or decision. For example, when someone gets dividend. Barberis and Huang (2001) used a monthly salary and a bonus salary, and framing concept to explain the investor then he wants to invest. He would be more preference. Framing induce individuals to inclined to invest using his bonus money develop attitude; whether tend to accept because he thinks (frames) that he invests gains/return in positive frame, or whether his bonus money, when something goes
Santi, Sahara, Kamaludin, The Effect of Mental Accounting… 143 https://doi.org/10.35760/eb.2019.v24i2.1907 tend to accept losses/risk in negative frame, neglect positions that offset or correlate or to treat them in balance. across accounts. This can lead to sub- With MA, investors pay attention to optimal aggregate portfolio performance. gains and losses (Barberies and Huang, Second, it can cause investors to irrationally 2001). Implementation of MA by investors distinguish between returns derived from is by using narrow framing. Thus, investors income and those from capital appreciation. framing their financial decisions by Many investors feel the need to preserve expressing attention to gains/returns or capital sums and prefer to spend interest. losses/risks and evaluating investment As a result, some investors tend to pursue decisions (outcomes), so the individual income streams and can unwittingly erode frames a subjective transaction in mind to principal (capital sums) in the process. determine the utility they receive. This Third, it can cause investor to allocate reflects an attention to the non-consumption assets differently, especially when resources of utility, where the natural employer stock is involved. Individual in experience exceeds narrow framed gains company retirement plans that offer no and losses. Furthermore, investors consider company stock as an option tend to invest two forms of MA. First, investors care in a balanced way between equities and about gains and losses in the value of fixed-income instruments. However, when individual stocks (individual stock employer stock is an option, individual accounting), and secondly, investors care (employees) usually allocate a portion of about gains and losses in the value of all contributions to company stock, so total portfolios, and show that MA forms affect equity allocation then could be too high; the price of assets in a significant way. and finally causing these investors portfolio MA is a bias that can cause a variety to be potentially under-diversified. Fourth, of problem for investors. Pompian (2001) it can cause investor to be trapped in or mention that MA can cause at least five failed to resist “house money” effect, problems. First, it can cause individual to wherein risk-taking behavior escalates as think or imagine that their investment wealth grows. Investor exposing this occupy separate “packages,” or accounts. rational behave irrationally because they There categories might include, for fail to treat all money as interchangeable or example money from monthly salary, fungible. Fifth, it can cause investor to money from bonus, college fund or money hesitate to sell investment that once for retirement. However, envisioning generated significant gains but, later over distinct accounts to correspond with time, have fallen in price. During the bull financial goals can cause investors to market condition investors become
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accustomed to or familiar with healthy, significant influence on residential property unrealized gains. But whenever market investment decision. The regret aversion started to goes down, they hesitate to sell becomes the first consideration and loss their positions. Later; everything becomes aversion becomes the second consideration too late, they regret not reaping gains when for investors in investing residential they could. property of house and apartment type in Lim (2004) conducted research on Surabaya. MA becomes the third how mental accounting has impact on consideration for investors to invest in investors’ trading decision by testing residential property such as house and whether investors' trading decisions are apartment in Surabaya. Their study show influenced by their preferences for framing support for Thaler’s (1985) study which gains and losses. She find that investors are found that investors tend to consider each more likely to bundle sales of losers than asset that is owned separately rather than sales of winners on the same day. She merge with the investment. Furthermore, confirm that her findings are consistent MA will affect an investor's investment with the Thaler’s hypothesis (1985) that decision depending on whether the investor individuals prefer integrating losses and is concerned about gains and losses in the segregating gains. In addition, the extent to value of individual stocks or in the value of which mixed sales of winners and losers are the entire portfolio (Barberis & Huang, consistent with the hedonic editing 2001). hypothesis is greater than what would be We will empirically examine the effect expected under random sales of stocks. She of MA on student’s investment decision. suggest that mental accounting is likely to Initially, there were only two investment play a significant role in investors' trading gallery in Bengkulu Province (Investment decisions. gallery of Bengkulu University and Sharia In Indonesia, there are studies Investment Gallery of IAIN Bengkulu), but conducted related to the MA bias. One of later other private universities in Bengkulu them is a study conducted by Sumtoro and Province also start to open investment Anastasia (2015). They examine the effect galleries for their students and for the of MA on decision making of residential public to learn and to practice investing in property investment in Surabaya. They find capital market. These two investment that MA does have influence on investor galleries have investors who are mostly decision of residential property investment. students. From the above discussion, we However, other factors such as regret develop the following hypothesis: aversion and loss aversion have more
Santi, Sahara, Kamaludin, The Effect of Mental Accounting… 145 https://doi.org/10.35760/eb.2019.v24i2.1907 H1: Mental accounting affects the independent variable is mental accounting stock investment decision of investors at (MA). The operational definition of the Investment Gallery (GI) FEB UNIB and variables included in this study is presented investors at Sharia Investment Gallery in Table 1. We define investment decision (GIS) IAIN Bengkulu. is a decision made by respondent about investing in stocks at the Galeri Investasi RESEARCH METHOD FEB UNIB and at the Galeri Investasi Shariah IAIN Bengkulu. Respondents were Variables and operational definition asked to respond on the following seven The dependent variable of this study is statements as listed in Table 1. investment decision (KI), and the
Table 1 Operational definition of research variables Variable Indicators Scale Investment 1. I always care about the gains and losses that I 5 point - Likert scale: decision get from my investment in the stock I choose 1 = strongly disagree using my monthly money. 2 = disagree 2. I always care about the gains and losses that I 3 = neutral get from my investment in the stock I choose 4 = agree using my bonus money. 5 = strongly agree 3. I invest in the type of investment that suits to my income sources type. Mental 1. I always allocate my income into several 5 point - Likert scale: Accounting accounts 1 = strongly disagree 2. I always treat my monthly income and 2 = disagree bonuses differently 3 = neutral 3. I always calculate the cost to be incurred from 4 = agree my monthly money 5 = strongly agree 4. I do not always calculate the cost to be incurred from my bonus money
Population and sample at GIS IAIN Bengkulu. We distributed The population of our study are questioner to these 100 investors in investors at GI FEB UNIB and GIS IAIN February – March 2017. Sampling Bengkulu. The sample of our study are 50 technique in this study is convenience investors at GI FEB UNIB and 50 investors
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sampling. Simple regression analysis is are 75 students, with the average investor used to test the hypothesis. coming from the students of semester 4 and semester 6. The total deposit amount is RESULTS AND DISCUSSION Rp.8.450.000,-. While based on data obtained from IAIN Bengkulu, total Descriptive statistics investors are 332 student investors, but only 261 investors are active in trading. The Based on the data obtained from the average investor comes from students of Investment Gallery of Bengkulu University, semester 4 and 6. The total deposit amount the students who are registered as investors is reaching Rp.303.128.100,- (table2).
Table 2 Respondens profile
Frequency Persentage Male 42 42% Female 58 58% Age: 17 - - 18 - - 19 18 18% >20 82 82% Student at semester: 2 - - 4 45 45% 6 48 48% 8 7 7% Monthly money:
Table 2 shows that 58 percent of our Respondents are mostly at semesters 4 and respondent is female. Respondents mostly 6, only 7% respondents are students of have aged more than 20 years old (82%). semester 8. Majority of respondents receive
Santi, Sahara, Kamaludin, The Effect of Mental Accounting… 147 https://doi.org/10.35760/eb.2019.v24i2.1907 monthly money of less than Rp 1,000,000. The third items in Table 3 shows that Regarding the length of time to invest and 60 respondent gave response agree, 34 how much is invested, many respondents respondent answered neutrally and 6 have invested more than 3 months. respondent answered strongly disagree. The Meanwhile, most respondents invested only average is 3.57, indicating that most 25% of the monthly income in stock. respondents are influenced by mental Table 3 describes the frequency accounting. distribution of respondent response on The fourth items in Table 3 shows that seven items statement. The first 4 items are 86 respondents gave agree response, 12 items for mental accounting variable, and respondents gave neutral response and 2 the rest are items for investment decision respondent gave disagree response. The variable. In Table 3, the first items we average obtained is 4.19 which indicates obtained the result: 10 respondents gave the that the respondent is influenced by mental answer of strongly agree, 44 respondents accounting. Indeed when someone instilled gave answer agreed, 38 respondents gave mental accounting in his mind, then he will neutral answer, 3 respondents disagreed, feel that the bonus money is not so and no respondents answered strongly important so that the spending from bonus disagree. This means more than 50% of money did not have to be counted carefully. respondents agree on it. The average The fifth items in Table 3 is obtained is 3.52 and indicating that the concerning about the gains and losses respondent is influenced by mental obtained from the investment of monthly accounting. money. We obtained that 19 respondents The second item in Table 3 show that gave response of strongly agree, 48 62 respondents stated strongly agree and respondents answered agree, 30 answered agree about the second statement, 32 neutral, and 3 respondents answered respondents answered neutral, while 6 disagree. The number of respondents who respondents answered disagree. Because gave response of agree and strongly agree is respondents who answered agreed more 67 respondents or 67%. The average than 50%, as well as the average obtained is obtained is 3.83 which indicates that on 3.61, then it indicates that more than half of average the respondents are influenced by respondents are influenced by mental mental accounting in their investment. accounting. Because mental accounting in a The sixth items in Table 3 is person seems to be his way of treating his concerning the gains and losses obtained money, one of them by distinguishing from the investment of bonus money. Table bonus money and monthly money received. 3 shows that 6 respondent answered
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strongly agree and 42 respondent people respondents gave agree response, 31 answered agree, 45 respondents answered respondents answered neutral, the neutral, 4 respondents answered disagree, remaining 3 respondents answered disagree. and 3 respondents answered strongly The average earned of 3.71 indicates that disagree. This means that as many as 48 the respondent is influenced by mental respondents or below 50% give an agree accounting in his investment. answere on this item. The average of 3.44 From the responses of respondents indicates that the respondents are discussed above, individuals who exhibit to influenced by mental accounting. This mental accounting will tend to divide his question is related to the fifth question income into certain accounts or categories. where fewer respondents care about the They will also treat the money received profit and loss of their bonus money differently according to the use of the investment because a person with mental money. This is in line with the opinion of accounting will be more concerned about Asri (2013) that mental accounting assumed the profit and loss of his monthly money that humans divide their money into certain investment than his bonus money groups (accounts) based on the purpose of investment. utilizing the money. Based on the above The seventh items in Table 3 is about data in Table 3, we can conclude that matching investment and sources of fund investors who have filled the questionnaire for investment. Table 3 shows that 67 largely exhibit to mental accounting.
Tabel 3. Frequency distribution of respondents response results
No Items Frequency of respondents response: mean Strongly Disagree Neutral Agree Strongly disagree agree 1 I always allocate my 4 4 38 44 10 3.52 income into several accounts 2 I always treat my 6 - 32 51 11 3.61 monthly income and bonuses differently 3 I always calculate the 6 - 34 51 9 3.57 cost to be incurred from my monthly money 4 I do not always - 2 12 51 35 4.19 calculate the cost to be incurred from my bonus money 5 I always care about the - 3 30 48 19 3.83 gains and losses that I get from my investment
Santi, Sahara, Kamaludin, The Effect of Mental Accounting… 149 https://doi.org/10.35760/eb.2019.v24i2.1907 in the stock I choose using my monthly money. 6 I always care about the 3 4 45 42 6 3.44 gains and losses that I get from my investment in the stock I choose using my bonus money. 7 I invests in the type of 2 - 31 59 8 3.71 investment that suits to my income sources type
Regression result stock investment decision of investors at Table 4 describes the regression result the Investment Gallery (GI) FEB UNIB and of mental accounting (MA) variable on investors at Sharia Investment Gallery Investment decision variable. The (GIS) IAIN Bengkulu, are accepted. Mental coefficient of MA is 0.33 and significant. accounting has influence on investor Therefore, we can conclude that the investment decision. hypothesis that mental accounting affect the
Table 4 Regression Result
Variable Coefficient Std. Error t-Statistic Prob.
Constant 2.6259 0.2828 9.2849 0.0000 MA 0.3307 0.0889 3.7181 0.0003
R-squared 0.1236 Mean dependent var 3.6601 Adjusted R-squared 0.1147 S.D. dependent var 0.5445 S.E. of regression 0.5123 Akaike info criterion 1.5201 Sum squared resid 25.7232 Schwarz criterion 1.5722 Log likelihood -74.0051 Hannan-Quinn criter. 1.5412 F-statistic 13.8242 Durbin-Watson stat 1.7175 Prob(F-statistic) 0.0003
Predictors: (Constant), MA (mental accounting). Dependent variable is KI (investment decision).
Students mostly earn their monthly differently? Our study finds that most of money from their parents, and if they want students (investors) treat the money to invest, then they will use their monthly differently. This is called mental money. In this study, we examined what if accounting. Mental accounting will cause a they get the bonus money equivalent to the person to take irrational steps to place monthly money. Will they treat both money money differently based on certain
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categories, such as how to earn money CONCLUSION AND SUGGESTION (work, inheritance, gambling, bonuses, etc.) This study has two main conclusions. or the nature of the use of his money First, we found that investors at GI UNIB (recreation, need, and others) (Pompian, and GIS IAIN Bengkulu exhibit to mental 2006). accounting bias. Second, we found that Investors are given a questionnaire mental accounting has significant influence with two forms the questioners, one with on investor investment decision in stock. multiple choice answers and another one with Likert scale. The result of respondent’s REFERENCES response on the multiple choices Asri, M. (2013). Keuangan Keperilakuan. questioners shows that on average Yogyakarta: BPFE. respondents appears to have some mental accounting bias. It is proved that half the Barberis, N., & Huang, M. (2001). “Mental respondents have mental accounting Accounting, Loss Aversion, and thought, but not so badly. For example, Individual Stock Returns.” The when they earn monthly money and bonus Journal of Finance, 56(4), 1247-1292. money, they will treat the money differently, for example in investing. When Bodie, Z., Kane, A., & Marcus, A. J. they invest in monthly money, they tend to (2006). Investments. Jakarta: Salemba invest a little of their monthly money. Empat. While with the bonus money, most respondents choose to invest with an Cheema, A., & Soman, D. (2006). amount greater than their monthly money. “Malleable Mental Accounting: The Because for them, the monthly money is Effect of Flexibility on The much more important than the bonus Justification of Attractive Spending money because after being scrutinized, they and Consumption Decisions.” Journal are also more afraid of the risks they face of Consumer Psychology, 16(1), 33- when they invest the monthly money than 44. the bonus money, and when there is a loss, Kahneman, D., & Tversky, A. (1979). they will regret more of the losses they get “Prospect Theory: An Analysis of when they invest with monthly money Decision under Risk.” Econometrica, rather than their bonus money. 47(2), 263-291.
Lim, S. S. (2004). Do Investors Integrate
Losses and Segregate Gains? Mental
Accounting and Investor Trading
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152 Jurnal Ilmiah Ekonomi Bisnis Volume 24 No. 2 Agustus 2019