Locus of Control and Savings

Arbeitspapier

This paper analyzes the relationship between individuals' locus of control and their savings behavior, i.e. wealth accumulation, savings rates, and portfolio choices. Locus of control is a psychological concept that captures individuals' beliefs about the controllability of life events and is a key component of self-control. We find that households with an internal reference person save more both in terms of levels and as a percentage of their permanent incomes. Although the locus-of-control gap in savings rates is largest among rich households, the gap in wealth accumulation is particularly large for poor households. Finally, households with an internal reference person and average net worth hold significantly less financial wealth, but significantly more pension wealth, than otherwise similar households with an external reference person.

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• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IZA Discussion Papers ; No. 7837

Classification and Topics

• Classification: Wirtschaft ; Portfolio Choice; Investment Decisions ; General Welfare; Well-Being ; Urban, Rural, Regional, Real Estate, and Transportation Economics: Housing Demand
• Subject: non-cognitive skills ; locus of control ; wealth accumulation ; asset portfolios ; savings

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Cobb-Clark, Deborah A. ; Kassenböhmer, Sonja C. ; Sinning, Mathias
• Event: Veröffentlichung
• (who): Institute for the Study of Labor (IZA)
• (where): Bonn
• (when): 2013

Further information

• Handle: http://hdl.handle.net/10419/89879