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Financial decision-making in the household: Exploring the importance of survey respondent, health, cognitive ability and personality

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  • Johnston, David W.
  • Kassenboehmer, Sonja C.
  • Shields, Michael A.

Abstract

Using detailed longitudinal data that tracks couples for 8 years, and asks each partner annually about who is responsible for making major financial decisions, we examine multiple potential determinants of financial decision-making allocations. An important focus is on the role that non-economic dimensions have in determining financial decision-making, in particular the physical and mental health of each partner, as well as their cognitive ability and personality traits. We find that increased employment and wages are positively associated with own decision-making responsibility in both cross-sectional and within-couple panel models, and that non-economic characteristics of couples are also important. Interestingly, we find that many results are sensitive to whether we use male or female reports of who is the decision-maker, suggesting that studies with information from only one person in the household need to consider that their results may be partially dependent upon the gender of the respondent.

Suggested Citation

  • Johnston, David W. & Kassenboehmer, Sonja C. & Shields, Michael A., 2016. "Financial decision-making in the household: Exploring the importance of survey respondent, health, cognitive ability and personality," Journal of Economic Behavior & Organization, Elsevier, vol. 132(PA), pages 42-61.
  • Handle: RePEc:eee:jeborg:v:132:y:2016:i:pa:p:42-61
    DOI: 10.1016/j.jebo.2016.09.014
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    2. Sahoo, Soham & Klasen, Stephan, 2018. "Gender Segregation in Education and Its Implications for Labour Market Outcomes: Evidence from India," IZA Discussion Papers 11660, Institute of Labor Economics (IZA).
    3. Nolan, Anne & Whelan, Adele & McGuinness, Seamus & Maître, Bertrand, 2019. "Gender, pensions and income in retirement," Research Series, Economic and Social Research Institute (ESRI), number RS87, August.
    4. Thomas, Sheetal & Goel, Mridula & Agrawal, Dipak, 2020. "A framework for analyzing financial behavior using machine learning classification of personality through handwriting analysis," Journal of Behavioral and Experimental Finance, Elsevier, vol. 26(C).
    5. Perales, Francisco, 2018. "The cognitive roots of prejudice towards same-sex couples: An analysis of an Australian national sample," Intelligence, Elsevier, vol. 68(C), pages 117-127.
    6. Marie-Hélène BROIHANNE, 2021. "Testing the gender gap in subjective financial literacy of spouses," Working Papers of LaRGE Research Center 2021-08, Laboratoire de Recherche en Gestion et Economie (LaRGE), Université de Strasbourg.

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    More about this item

    Keywords

    Decision-making; Gender; Disagreement; Financial decisions;
    All these keywords.

    JEL classification:

    • J12 - Labor and Demographic Economics - - Demographic Economics - - - Marriage; Marital Dissolution; Family Structure
    • D13 - Microeconomics - - Household Behavior - - - Household Production and Intrahouse Allocation
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions

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