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Locus of Control and Savings

Deborah Cobb-Clark (), Sonja de New and Mathias Sinning

No 7837, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: 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.

Keywords: wealth accumulation; locus of control; non-cognitive skills; asset portfolios; savings (search for similar items in EconPapers)
JEL-codes: G02 G11 I31 R21 (search for similar items in EconPapers)
Pages: 48 pages
Date: 2013-12
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Published in: Journal of Banking and Finance, 2016, 73, 113-130

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Related works:
Journal Article: Locus of control and savings (2016) Downloads
Working Paper: Locus of Control and Savings (2014) Downloads
Working Paper: Locus of Control and Savings (2013) Downloads
Working Paper: Locus of Control and Savings (2013) Downloads
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