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Locus of Control, Savings and Propensity to Save

Alessandro Bucciol and Serena Trucchi

No E2020/10, Cardiff Economics Working Papers from Cardiff University, Cardiff Business School, Economics Section

Abstract: We study the relationship between saving choices and a key psychological characteristic such as locus of control using data from a longitudinal survey representative of the Dutch population. Locus of control measures the extent to which individuals perceive their life outcomes to be determined by their own actions, as opposed to external factors. Our findings show that those who believe to be in control of future outcomes save more, both at the extensive (probability to save) and intensive margins (amount of savings). We also investigate the mechanisms behind the relationship. Locus of control may affect both the propensity to save for general purposes and savings to achieve a specific purchase goal (e.g. buying a house). We find that both channels are significant, the latter being more sizeable.

Keywords: Locus of Control; Saving decisions; Propensity to save; Mediation analysis. (search for similar items in EconPapers)
JEL-codes: D14 D91 (search for similar items in EconPapers)
Pages: 28 pages
Date: 2020-07
New Economics Papers: this item is included in nep-cbe, nep-eur and nep-neu
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