The Dogs of the Dow strategy has long been popular among investors. McQueen, Shields, and Thorley (1997) find that while the strategy beat the Dow with statistical significance the results were not economically significant. However, Filbeck, Holzhauer, and Zhao (2017) examine a variation of the Dogs of the Dow using Fortune’s Most Admired Companies and find it beats the S&P 500 on a risk-adjusted basis with both statistical and economic significance. We test another variation that applies the Dogs of the Dow strategy to the S&P 500, selecting the five highest dividend yield stocks from each S&P 500 sector. We compare returns of this Sector Dogs strategy to those of the Dogs of the Dow and the S&P. We find that this strategy produces significantly higher raw returns. The Sector Dogs also significantly outperforms the S&P in terms of the Treynor Ratio and Jensen’s Alpha.
Author(s): Brett Cotten, Autumn Wilson, Alan Tidwell
This study examines the risk-adjusted performance of actively managed mutual funds vs. passively managed mutual funds between 1991 and 2018 and finds that the statistical significance of the difference in performance between the two types of funds disappears when the passively managed funds are compared to competitively priced actively managed funds. The practical implication of this study is that, setting tax considerations aside, as long as investors are cost conscious in their fund selection process, investing in passively managed funds does not meaningfully improve investor outcomes.
Associate Professor of Finance, California State University, Fullerton
- ETFs- Active vs. Passive Investing- Opportunities for firms to invest in the future of the Mihaylo College's CFP Board-Registered Personal Financial Planning Program
Tuesday October 15, 2019 9:00am - 9:50am CDT
201 A
This paper analyzes the effect of student loan debt on personal bankruptcy. While nearly impossible to discharge education debt in bankruptcy, student loans have mandatory repayments that may constrain some borrowers. The distress faced by some may reach the point where student loan borrowers seek protection for those debts that can be addressed through bankruptcy. Results suggest that student loan debt may supplement the existing credit card debt and adverse event explanations of bankruptcy. We present evidence from a nationally representative panel survey (NLSY79) that education debt is positively related to filing for bankruptcy among those with active unpaid loans. Student loan borrowers with ‘some college’ are 64 percent more likely to file bankruptcy. Associate degree holders and those with a bachelor degree or higher education are 68 percent and 43 percent more likely to seek bankruptcy protection, respectively. Separately, we estimate that the likelihood of bankruptcy increases 6.8 percent for each $10,000 of unpaid loans.
With student loan debt topping $1.53 trillion by the second quarter of 2018, understanding the impact of that debt on borrowers is of critical importance (Board of Governors of the Federal Reserve System, 2018). Many student loan borrowers report that student loan debt is preventing them from purchasing a home (The National Association of Realtors Research Department and American Student Assistance, 2017). Studies have shown that there is a negative relationship between student loans and homeownership (Mezza, Ringo, Sherlund, & Sommer, 2016). Despite the importance of housing in the U.S. economy and the concerning relationship between student loan debt and homeownership, very little research has been done in this area. This study seeks to expand the research by examining the impact of both federal and private student loans on homeownership. Additionally, mortgage debt burden as it relates to federal and private student loans is investigated.
This study was designed to obtain a better understanding of an investor’s portfolio choices by examining the mediation effect of the use of a financial planner on the willingness to take risks. The dataset used in this study was the 2016 wave of the Survey of Consumer Finances (SCF). To determine the association among the variables, a logistic regression and Ordinary Least Squares (OLS) regression models were developed. Study results indicated that those who are more willing to take risks tend to use the services of a financial planner and tend to hold a larger proportion of stock assets in their portfolios (as a percentage of overall financial assets). However, with regard to holding risky assets, findings suggest that the effect of willingness to take risks is reduced somewhat when an investor’s use of the services of a financial planner is accounted for.
Several recent papers report that investors would benefit from investing in equal-weighted portfolios instead of the traditional value-weighted portfolios. These papers employ theoretical models and simulated portfolios to support their recommendation. Since this switch would be a radical change from current practice for index investors, we re-examine this proposition by studying the historical performance of equal-weighted and value-weighted versions of five different S&P and Russell stock indexes over the last two decades. Adopting the individual investors’ perspective, we also examine the performance of exchange traded funds that track these indexes.
The objective of this research is to enhance understanding of the behavioral biases that may adversely impact younger generations’ financial outcomes. Research based on national survey data suggests that differences in overconfidence, financial literacy, risk preferences, and present bias all impact saving and investment decisions. In an incentivized laboratory experiment, subjects make investment and asset allocation decisions over a meaningful time horizon. We test the efficacy of alternative behavioral prompts to motivate optimal saving decisions. Specifically, we consider the effects of invoking the future self, setting goals in advance, and accessing professional or peer advice. A major contribution of this research is that we control for idiosyncratic time preferences, risk tolerance, overconfidence and financial literacy when studying the impact of various interventions.
This study investigates the association among being farmers, psychological factors, and demographic factors for three research questions: (a) how respondents can be grouped by being farmer, psychological factors, and demographic factors, (b) whether farmers are showing higher financial well-being, and (c) how psychological factors are associated with the groups. Findings of this research suggest substantial need for more comprehensive approach to financial well-being of people even in the same job category by considering different psychological factors such as financial risk tolerance and demographic profiles.
In theory technical analysis may work because of three reasons: 1) herding behavior, 2) prices being partially revealing and 3) sentiments. Our empirical cross-country evidence from 50 countries shows that technical analysis indeed works particularly well in countries that score highly on different proxies for herding and information uncertainty. As a crude indication our combined set of proxies explain around 65% of the variation in cross country profits from technical analysis strategies. Our result may explain why studies using data from different countries find mixed results on the profitability of technical analysis.
This paper provides an overview of the development of the KiwiSaver scheme launched in New Zealand in 2007, including the changes that have occurred in the scheme. It explores the growth in KiwiSaver membership and savings that has occurred. The question of the success of KiwiSaver in achieving its objectives is considered, including the use of KiwiSaver contributions to assist with the purchase of first homes is examined
This paper explores whether passive fund managers who aim to be in the 1st quartile by chasing higher returns (i.e. higher risk) are more likely to achieve their goal compared with those that chase somewhat lesser returns (i.e. lower risk). Using monthly historical returns from 01/01/1979 to 01/01/2018, we show that if a fund’s goal is to achieve higher AUM, it should aim to be in the 1st quartile every year. However, if a fund’s long-term goal is to stay in the 1st quartile, it should aim to be in the 2 nd quartile every year.
This study seeks to confirm the Mature Market Institute findings on financial elder abuse, published in 2009 and 2011. It failed to do so on many accounts using empirical analysis.
This study investigates the determinants of consumer demand for life insurance. The literature suggests a behavior gap exists between the economic need for life insurance and the low propensity of consumer demand for insurance products. Researchers have examined potential factors for this life insurance demand “puzzle” with possible explanatory factors such as individual preferences, literacy level, and financial constraints. Although, many factors have been studied, the life insurance demand “puzzle” persists. This study contributes to the literature by investigating the association between personality traits and life insurance ownership as a possible explanation for life insurance consumer demand. Financial planners and life insurance professionals could benefit from understanding their client’s personality traits to tailor recommendations in a way that could increase the efficiency of the client's information processing, and thus potentially influence a positive life insurance purchase decision.
A substantial body of research shows that the financial behaviors of men and women differ significantly. As one example, women are less likely to carry life insurance and more likely to be underinsured (Insurance Information Institute, 2010). Around 43% of adult women do not have life insurance, with many of those who do carry life insurance being underinsured. On average, women’s life insurance coverage is only about 69% of men’s coverage. Women carry only twice their income in life insurance coverage, while men carry life insurance that is nearly three times their earnings (MetLife, 2013). Among women who earn $50,000 per year, 52% report that they do not carry an adequate amount of life insurance, or they are not sure if they have enough (MetLife, 2012). The purpose of this study is to explore gender differences in life insurance use and coverage using a life-cycle framework.
How do ‘investors’ differ from the general US population? Are there differences between the two groups in the components of financial wellness? If so, would this shed more light on the factors that influence financial choices? Using Soo’s (2008) financial wellness conceptual framework, as well as data from the National Financial Capability Study (2015), this analysis explores the four basic components of financial wellness: (1) objective status, (2) financial satisfaction, (3) financial behaviors, and (4) subjective perceptions. Are the investors, or those who engage in more complex financial behaviors, different in a significant or predictable way? Understanding what leads individuals to participate in higher-level financial practices will help researchers and policy makers design and develop more effective financial literacy initiatives and policies. By examining financial decisions through a more holistic lens, hopefully we will consider more holistic, long-term approaches to financial wellness.
This study investigated the effects of psycho-behavioral characteristics, such as financial stress, health risk behavior, and self-efficacy, on level of life satisfaction by estimating the latent-subgroup differences using a finite mixture regression model. Results from this study describe profile of individuals struggling in multiple life situations that would affect each other and happen concurrently. The effects of financial stress, health risk behavior, and self-efficacy variables on life satisfaction differed by the detected four clusters. Compared to results from an Ordinary Least Square (OLS) regression, dynamics of certain variables were better identified when the relationship was analyzed by latent group characteristics. For example, marginal effect of smoking at different clusters offset each other, making the effect of the variable positive and significant effects of financial stress, alcohol, and locus of control financial stress, which varied by groups, became insignificant in the OLS model. The findings provide the importance of capturing difference between groups in analyzing the relationship between life satisfaction and psycho-behavioral characteristics, and suggest a need for intervention strategies to promote healthy coping mechanisms in response to life struggles.
Author(s): Jae Min Min Lee, Wookjae Heo, Narang Park
The purpose of this study is to analyze the debt load of college-aged students. We aim to identify those factors that explain variations in debt. Our explanatory variable of interest is financial literacy. That is, our objective is to determine if debt loads vary with financial knowledge. This research is significant due to the growing levels of consumer debt among college students.
This paper complements the work of Kim and Chatterjee (2018) by examining the effect of student debt on life satisfaction for both all and retired households using longitudinal data set from the 2011-2017 U.S. Panel Study of Income Dynamics (PSID). The study estimates the random effects ordered probit model with Mundlak correction. The findings from the current study indicate that, for both all and retired households, the presence of student debt decreases the probability that households will report “very satisfied” or “completely satisfied” with life compared to households without student debt. The incidence of student debt, however, increases the probability that households will report either “not at all satisfied,” “not very satisfied,” or “somewhat satisfied.” The amount of student debt also shows similar effects on life satisfaction, although the effect is non-monotonic. Unlike the results for all households, the results for retired households are both statistically and economically significant.
Langer et al. (1978) refer to a certain type of irrelevant data as “placebic information”. When making investment decisions, retail investors commonly receive a considerable amount of placebic information from financial advisors, analyst reports, oetc. The purpose of our study is to analyze how investors perceive placebic information and whether placebic information influences investors’ stock price forecasts. For our analysis we initiate a questionnaire-based stock price forecast competition. 197 participants are asked to forecast the stock price in three months’ time and an upper and lower bound of the stock price that will not be exceeded or undercut with more than five percent probability, respectively, within the next three months. With an increasing amount of placebic information, participants state to have significantly more relevant information available to accurately forecast the stock price. Hence, participants are subject to an information illusion as they perceive placebic information as actually relevant information.
Author(s): Andreas Oehler, Matthias Horn, Stefan Wendt
Investors need to carefully select the proportion of various assets to minimize the portfolio risk for a given expected return. Appropriate portfolio risk is good for investment. This study analyzes the relationship between financial risk tolerance, confidence levels, and investment portfolio risk. Meanwhile, this paper uses the level of confidence to measure the overestimation or underestimation of financial knowledge and contributes to the literature by demonstrating whether over-confidence or under-confidence of financial knowledge affects portfolio risk and whether it moderates the impact of investment risk tolerance on portfolio risk.
Rarely does an idea evoke such intensity of extreme emotions, as in the case of the distributed ledger technology (DLT) and its native digital currency system called Bitcoin. The technology together with its ecosystem was even investigated before the US Senate Committee, where it was explicitly debunked by the critics. This article is concerned with the gradual process of assimilating DLT within the financial services sector. Its main purpose is to draw attention to a set of important transformative implications DLT might have on the interaction, business processes, and growth opportunities of the financial intermediaries in the near future.
Bitcoin, was introduced in late 2008 but became very popular all over the world. The trading volume, returns and risks of Bitcoin have increased significantly in recent years. In this paper I extend the evidence on seasonal anomalies (day-of-the-week, monthly and holiday effects) by examining the return patterns of Bitcoin markets to establish whether previously observed predictabilities in stock returns are reflected in the returns of Bitcoin. This determination is consequential because institutional characteristics of Bitcoin may allow exploitations of observed seasonal anomalies by proposing different trading strategies. Using the daily in-sample and out-of-sample data, I also examine the performances and cross-correlations of Bitcoin with major financial assets (stock, bonds, currency, commodities etc.) which may have implications for investors’ portfolio diversifications and market efficiency.Findings of this paper may have further implications for both the investors and regulators since Bitcoin is still considered as a self-regulated and decentralized cryptocurrency.
Debt has become an increasingly significant issue among American families. Based on an analysis using the 2016 Survey of Consumer Finances (SCF), we estimate average household debt-interest payments exceed the expected returns on financial assets by more than 50%. In this study, we analyze the different economic, demographic and behavioral factors that are associated with household borrowing and leverage ratios. Then, we investigate whether the attributes related to different debt categories are similar by separating the “good” and “bad” debts. After checking the prevalence of high-interest debts, we perform “alpha-equivalent analysis” (compare debt interest savings with investment income) to calculate the potential benefits of liability optimizations. The results indicate that households with lower assets, income, and education levels need the most assistance and could significantly benefit from debt management. Families with myopic planning horizons are more likely to carry a higher amount of “bad” debts, such as credit card balances.
Career and education choice play a central role in individual’s long-term financial planning. In this study, we focus on answering the question of whether higher education is still financially valuable. We define an individual’s wealth in terms of human capital (expressed as the present value of future earnings) in the function of overall wealth. We argue that human capital accounts for the majority of an individual’s wealth portfolio in most cases. By including human capital in the traditional portfolio choice framework, we show that the choice of career and education level has a significant effect on the Sharpe ratio of an individual’s overall wealth portfolio. We conclude by finding the present values of future earnings streams for individuals of various education levels from a number of occupations. The calculations are meant to provide some guidance on both career and education level choices.
The attention surrounding credentials in the investments industry has increased since 2005 as the number of financial credentials tracked by The Financial Industry Regulatory Authority (FINRA) ballooned from 48 in 2005 to 160 in 2015. This issue has caused the Consumer Financial Protection Bureau and FINRA to investigate the academic rigor of financial designations even though neither organization has provided empirical evidence that such credentials actually confuse or mislead investors. This paper investigates whether or not such credentials mislead investors and, if such credentials are misleading, this paper will investigate how they deceive investors.
Professional designations offered by the College for Financial Planning are designed to provide additional levels of knowledge and expertise and add credibility to the financial advisors who successfully earn them. While designations may be pursued either before or after an individual earns the CFP certification, can the professional designation education programs serve as a gateway to the CFP education program? This study found that only the Foundations in Financial Planning (FFPN) course has a higher percentage of female and African-American students than the CFP education program, with all other designations having a higher percentage of white male students attempting them prior to attempting the CFP education program. This study also found relevance between designation programs and CFP education. Actively promoting designations to women and minorities may provide a greater understanding of the topics and concepts required to be successful and increase confidence when attempting the CFP education program.
Author(s): Aman Sunder, David Mannaioni, Rebecca Henderson, Jim Pasztor
Universities serve an important role in the development of financial services professionals. This project is a preliminary analysis of student performance in financial planning courses redesigned from a traditional lecture format to an active learning format. Active learning literature from higher education, accounting, and STEM guided the course redesigns. Participants are undergraduate students in financial planning programs at two southeastern state universities in the U.S. Experiential learning and service learning have been documented in the literature; however, these pedagogies are community-based and external to the classroom. Financial planning literature regarding instructional techniques in the classroom is limited. Additional studies are needed to evaluate the effectiveness of active learning in financial planning classrooms. The purpose of this study is to measure, evaluate and record the effectiveness of course redesigns for large sections of an introductory personal finance course and core courses in the curriculum of the financial planning major.
Author(s): Kenneth White, Kimberly Watkins, Michael Thomas, Lance Palmer
This paper investigates the mediation relationship of individuals’ financial risk preference between their personality traits and stock investment decisions by using the 2014 Health and Retirement Study (HRS). Structural equation model results show that that individuals’ stock market participations and stock share investment decisions are influenced by personality traits when considering financial risk preference as a mediator. Results indicate that those with higher openness and extroversion are more likely to participate the stock market and have higher stock share in their investment portfolios. These with higher conscientiousness and agreeableness are less likely to participate the stock market and have lower stock share in their investment portfolios. Financial planning implications are provided.
Yi (Bessie) Liu is a Ph.D. student in the Department of Personal Financial Planning at Texas Tech University. She aims to serve diversified groups especially for first and second generation immigrants as well as Asian-Americans to assist them in achieving a better financial futur... Read More →
Wednesday October 16, 2019 10:45am - 11:45am CDT
202 AB
This study investigates the relationship between investor optimism, financial knowledge, and advice from a finance professional. While other studies focus on how investor optimism influences financial behavior, this study examines the characteristics associated with investor optimism. We find that optimistic investors think they are more knowledgeable, as measured by subjective financial knowledge. At the same time, optimistic investor they are actually less knowledgeable, as measured by objective investment knowledge. We also find that optimistic investors are more likely to seek assistance from a broker. Our results highlight the importance of investor education on behalf of the finance professional to ensure realistic market and portfolio expectations.
Author(s): Andrew Scott, Wendy Usrey, Shane Enete, Miranda Reiter, and Martin Seay
Using the 2014 wave of the Health and Retirement Study (HRS) and a Heckman selection model, this paper examines the relationship between married household bargaining power and charitable giving. This paper finds that a household in which the husband’s age is greater than his wife’s age has a higher probability of donating money to charity compared to a household in which the wife is older than her husband. Similarly, a household in which the husband’s education is greater than his wife’s has a higher probability of charitable giving compared to a household in which the wife has a higher degree than her husband. Additionally, this study finds that both spouses’ educations have a significant influence on the probability and the amount of charitable giving. A higher level of education is associated with a higher incidence of charitable giving and the amount of charitable giving. Lastly, increased income and wealth also increase both the probability and amount of charitable giving, all else equal.
Yi (Bessie) Liu is a Ph.D. student in the Department of Personal Financial Planning at Texas Tech University. She aims to serve diversified groups especially for first and second generation immigrants as well as Asian-Americans to assist them in achieving a better financial futur... Read More →
Wednesday October 16, 2019 1:45pm - 2:45pm CDT
201 A
It is not an easy task to determine how risk averse a household is when members of the household have different levels of risk aversion (Zhang, 2017)¹. Similarly, it is unclear how risk perceptions of members of a household collectively determine the household-level risk perception. It’s argued that the risk aversion of the person with higher risk aversion in a household should be generally employed as the input into construction of an investment policy statement for a household. However, there exists few research studies which provides emperical guidance by examining the relationship between household-level risk perception and a household’s portfolio choice. This current research intends to fill this research gap. [1] In her paper, Zhang showed that a household has a decreasing relative risk aversion when two household members have different relative risk aversions.
This study examines student debt and its effects on the philanthropic behavior of households using data sets from the 2011 to 2017 U.S. Panel Study of Income Dynamics. The empirical results show that the presence of student debt on the balance sheet of a household is associated positively to both the probability of making charitable contributions and the amount of charitable donations. The study also finds that the amount of student debt relates positively to the total amount households contribute to charitable organizations. This paper finds no evidence of a statistically significant relationship between the amount of student debt and the probability that a household will donate to charity.
Modern Portfolio Theory (MPT) and the Efficient Markets Hypothesis (EMH) have influenced portfolio management strategies for an entire generation. Taking the example of an average Canadian family from 1977 to 2016, this paper examines how well MPT and EMH served the baby-boom generation of investors. A model investing strategy was constructed based on the principles of MPT and EMH. The strategy was evaluated for its ability to adequately provide for the subject couple in retirement. Results of this portfolio were compared to other popular investment alternatives. Using generally-accepted rules-of-thumb in financial planning, the MPT strategy was found to have provided an adequate retirement income for the subject couple. Some of the other strategies moderately exceeded the returns of the MPT strategy, while others underperformed this benchmark. Analysis of these discrepancies reinforced the significance of diversificaton and of rebalancing portfolios through dynamic asset allocation.
This research utilizes the National Financial Capability Study (NFCS) funded by the FINRA Investor Education Foundation. The national and state-level data are extracted from the 2015, 2012 and 2009 NFCS State-by-State Surveys, each of which employed nationwide online surveys of over 25,000 American adults. This survey solicits information from individual investors on retirement and non-retirement account investments, actual level of investment sophistication, and self-perceived level of investment sophistication, along with many demographic variables. This study investigates the relationship between actual and perceived investor sophistication to determine retirement preparedness of investors, as well as whether investors understand their level of financial preparedness. It is hypothesized that most investors are not as prepared for retirement nor as sophisticated investors as they believe. Additionally, it is hypothesized that there will be a difference in results related to age, education, and gender.
Whether fundamental analysis or technical analysis should be employed to predict stock returns is a longstanding debate in the literature. Incorporating a regime-switching mechanism, we establish a hybrid model with non-uniform weightings on each type of analysis to examine the debate. Our empirical results are consistent with the following notions. First, stock investors should give more weight to fundamental analysis for firms with incremental information involved in accounting reporting. Second, stock investors care more about the intrinsic value of firms obtained with fundamental analysis when encountering information asymmetry or uncertainty. Third, the weight given to fundamental analysis should be increased for stocks with unusual volatility in prices. However, when the market is crashing, fundamental analysis might become invalid, and thus the weighting given to fundamental analysis should be decreased. For technical analysis, the reverse of these arguments holds true. The results are robust to alternative measures of the variables.
An anniversary date of a contract’s initiation determines the valuation for investment opportunities such as equity indexed annuities and a variety of structured investment products. Using the S&P 500 daily returns from 1950 to 2018 as the underlying index, this paper analyzes anniversary-date-based differences in returns for these types of investment products. Along the lines of the many documented calendar-based market anomalies, we find that non-trivial differences in returns can exist for contracts initiated mere days apart. These differences exhibit seasonality and do not appear driven by a particular sub-period of the almost seven-decade sample we investigate.
Robo-advisers enable investors to establish an automated rebalancing-strategy for a portfolio usually consisting of stocks and bonds. Since households’ portfolios additionally include further frequently tradable assets like real estate funds, articles of great value, and cash(-equivalents), we analyze whether households would benefit from a service that automatically rebalances a portfolio which additionally includes the latter assets. In contrast to previous studies, this paper relies on real-world household portfolios which are derived from the German central bank’s (Deutsche Bundesbank) Panel on Household Finances (PHF)-Survey. We compute the portfolio performance increase/decrease that households would have achieved by employing rebalancing strategies instead of a buy-and-hold strategy in the period from September 2010 to July 2015. The empirical analysis shows that the analyzed German households would not have benefited from an automated rebalancing service and that no subgroup of households would have significantly outperformed another subgroup in the presence of rebalancing strategies.
The assessment of financial risk tolerance is a topic of great interest in the financial services profession. Numerous scales and techniques have been developed to facilitate the measurement of risk attitudes. Cronbach’s alpha has traditionally been used as a measure of scale reliability. Over the past decade, however, psychometricians have published concerns about the ongoing use of Cronbach’s alpha as a robust measure of scale reliability. In its place, some have argued that reliability estimates should be based on Greatest Lower Bound and omega. The purpose of this paper is to describe these alternative reliability measures, in comparison to Cronbach’s alpha, for a widely used financial risk-tolerance scale. Using a large dataset with 179,450 observations, findings from this study suggest that while estimates derived on the basis of Cronbach’s alpha, the GLB, and omega differ, for the most part, reliability estimates across the measures are close.
Author(s): Wookjae Heo, John E. Grable, Michael Roszkowski, Abed Rabbani
This study intends to compare the work-life balance related inventory of women in financial planning with that of men in the profession, and also among subgroups of women based on household responsibilities and size of the financial planning firm. This study hopes to find explanations for the lack of gender diversity in the financial planning industry and test the strengths and weaknesses of the profession for increasing the participation of women in the future.
Author(s): Aman Sunder, Cindy Riecke, Jennifer Lehman, Rebecca Henderson
I received my PhD in personal financial planning at Texas Tech University and am currently enjoying my one year appointment at the University of Utah. Current research is on diversity issues in charitable planning. I have JD and MPA degrees from UNC-Chapel Hill. I love road trips... Read More →
Wednesday October 16, 2019 3:30pm - 4:30pm CDT
202 AB
Life insurance is commonly used to protect future human capital earnings. Factors related to life insurance ownership is well studied in the literature. Liebenberg, Carson, and Dumm (2012) provided a thorough summary of the variables used in the literature. Using the Health and Retirement Study (HRS) leave behind survey, this study is the first to add behavioral factors, to our knowledge, of spousal relationship as a measurement factor regarding life insurance ownership. For the same reason, this study focuses on life insurance ownership with the spouse as the beneficiary. The results suggest that the quality of relationship quality with the spouse is a strong and dominating factor of life insurance ownership. In other words, most individuals are motivated to protect the spouse from potential premature death. The impact of spousal relationship quality is much larger than traditionally explored objective factors.
Author(s): Janine Sam, Yuanshan Cheng, Philip Gibson, Tao Guo
As an early career researcher and academic, I am engaged with current financial planning issues that are relevant and applicable to both consumers and financial planning practitioners. I oversee the Financial Planning program at Shepherd University, and I am currently teaching Risk... Read More →
Wednesday October 16, 2019 4:45pm - 5:45pm CDT
201 A
In personal financial planning, life insurance is used as a tool to hedge against a potential loss of income to surviving household members in the event of a breadwinner’s death. However, there are other uses for life insurance including the payment of a debt, the payment of taxes and other expenses associated with transferring wealth, the continuation of a business plan. In addition to their sophisticated structures, life insurance products have high premium costs than other insurance products and are associated with the unpleasant event of death. Researchers focus on the factors driving the demand for life insurance. This study examines the determinants of purchasing life insurance by considering a larger number of factors (e.g. three measures of leaving a bequest), using most recent waves of the RAND HRS panel data, and estimating a fixed-effects logit model.
Risk tolerance may act as an important role in shaping health sensation-seeking behaviors (i.e., smoking and drinking). When risk tolerance (in the seven domains: driving, finance, occupation, health, faith, relationship, and life change) is included in regression models for the relationship between family income and smoking/drinking behavior, as a partial mediator, the income effect was changed. This result means that risk tolerance mediates the income effect on smoking/drinking behavior. When viewed this way, risk tolerance may be more important than income in relation to sensation-seeking behavior. It is possible that risk tolerance may also be the pathway to help the client decrease in smoking/drinking activities. This change should result in improved financial situations as well as their health problem by reducing the cost of alcohol and tobacco use.
Our research is designed to examine over 100 financial literacy programs throughout the country and address key program features, main program objectives, efficacy of program heuristics, provider follow-up with program participants, and general program success in meeting stated objectives.
This study investigates the financial behavior of individuals that own campers, boats, motorcycles, snowmobiles, personal aircraft, and other powersports vehicles. Because of the extraordinary expense associated with buying, maintaining, and operating these leisure vehicles, owners must be extremely diligent in planning in order to meet financial goals and exhibit good financial behaviors. The study finds that leisure vehicle ownership is associated with increased financial knowledge. However, leisure vehicle ownership is also associated with increased debt levels, including credit card debt. While leisure vehicle owners know more about personal finance than their non-leisure vehicle owning counterparts, leisure vehicle owners display worse financial behaviors. This information provides value to individuals, planners, and policy makers alike.
