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Author: Finke, Michael S.
Resulting in 6 citations.
1. Chatterjee, Swarnankur
Finke, Michael S.
Harness, Nathaniel J.
Individual Wealth Management: Does Self-esteem Matter?
Journal of Applied Business and Economics 10,2 (2009): 1-14.
Also: http://works.bepress.com/swarn_chatterjee/3/
Cohort(s): NLSY79
Publisher: North American Business Press
Keyword(s): Assets; Risk-Taking; Rosenberg Self-Esteem Scale (RSES) (see Self-Esteem); Self-Esteem; Wealth

Permission to reprint the abstract has not been received from the publisher.

Self-esteem measures confidence in one's abilities. Prior literature has shown that higher self-esteem can also affect individual financial decision making through an increased willingness to invest in risky assets and motivation to enhance self image through wealth accumulation. However, self-esteem can also lead to wealth-destroying investment behaviors due to overconfidence and an unwillingness to accept inevitable losses. Using the Rosenberg Self-esteem Scale included in the National Longitudinal Survey of Youth, we model wealth and portfolio allocation as a function of self-esteem, socioeconomic and demographic variables. Self-esteem is positively associated with an increase in net worth between 1994 and 2004, and with the proportion of a household portfolio held in investment assets. This study adds to the literature on psychological determinants of optimal household portfolio allocation by providing evidence that the positive effects of self-esteem outweigh the negative financial behaviors identified in prior literature.
Bibliography Citation
Chatterjee, Swarnankur, Michael S. Finke and Nathaniel J. Harness. "Individual Wealth Management: Does Self-esteem Matter?" Journal of Applied Business and Economics 10,2 (2009): 1-14.
2. Chatterjee, Swarnankur
Finke, Michael S.
Harness, Nathaniel J.
The Impact of Self-Efficacy on Wealth Accumulation and Portfolio Choice
Applied Economics Letters 18,7 (2011): 627-631.
Also: http://www.tandfonline.com/doi/abs/10.1080/13504851003761830
Cohort(s): NLSY79
Publisher: Routledge ==> Taylor & Francis (1998)
Keyword(s): Assets; Behavior; Demography; Financial Investments; Pearlin Mastery Scale; Self-Perception; Self-Regulation/Self-Control; Socioeconomic Factors; Wealth

Self-efficacy is a psychological construct based on the evaluations of one's ability to accomplish certain behaviours or achieve certain outcomes (Bandura, 1977). Although self-efficacy has been linked to health, task accomplishment, greater socio-economic status and income (Seeman and Seeman, 1983; Stretcher et al., 1986; Gecas and Seff, 1990; Judge et al., 2002; Zagorsky, 2007), there has been no study that investigates whether self-efficacy is also a predictor of greater wealth creation over a specific period of time. Applying a theoretical framework based on self-efficacy, this article investigates household financial behaviours using the National Longitudinal Survey of Youth (NLSY79) data-set. For the purpose of this study, change in wealth across time and financial market participation is modelled as a function of socio-economic and demographic variables drawn from prior literature. Findings from this research reveal that self-efficacy is indeed a predictor of investment for financial assets and is also a predictor of wealth creation across time.
Bibliography Citation
Chatterjee, Swarnankur, Michael S. Finke and Nathaniel J. Harness. "The Impact of Self-Efficacy on Wealth Accumulation and Portfolio Choice." Applied Economics Letters 18,7 (2011): 627-631.
3. Cummings, Benjamin F.
Finke, Michael S.
James, Russell N. III
Bounded Rationality Strikes Again: The Impact of Cognitive Ability and Financial Planners on Roth IRA Adoption and Ownership
Working Paper, Social Science Research Network, March 2013.
Also: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1968984
Cohort(s): NLSY79
Publisher: Social Science Electronic Publishing, Inc.
Keyword(s): Armed Forces Qualifications Test (AFQT); Cognitive Ability; Financial Behaviors/Decisions; Financial Investments; Savings

Permission to reprint the abstract has not been received from the publisher.

Roth IRAs were introduced in the late 1990s and provide another option for tax-sheltered retirement savings. Because determining the benefits of a Roth IRA is a complex decision, we hypothesize that cognitive ability and having a financial planner have significant impacts on the timing and likelihood of using a Roth IRA. Using data primarily from the 2004 and 2008 administrations of the National Longitudinal Survey of Youth (NLSY), we find that greater cognitive ability and having a financial planner are both positively related to Roth IRA ownership and earlier adoption. If individuals with higher cognitive ability and/or a financial planner are better able to recognize and implement beneficial tax strategies, then tax policy will yield unintended distributional consequences. The complexity of a tax policy also limits its ability to modify individual behavior in the ways envisioned by policymakers.
Bibliography Citation
Cummings, Benjamin F., Michael S. Finke and Russell N. III James. "Bounded Rationality Strikes Again: The Impact of Cognitive Ability and Financial Planners on Roth IRA Adoption and Ownership." Working Paper, Social Science Research Network, March 2013.
4. Cummings, Benjamin F.
Finke, Michael S.
James, Russell N. III
The Impact of Cognitive Ability on Roth IRA Ownership
Working Paper, Social Science Research Network, October 2011.
Also: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1968984
Cohort(s): NLSY79
Publisher: Social Science Electronic Publishing, Inc.
Keyword(s): Armed Forces Qualifications Test (AFQT); Armed Services Vocational Aptitude Battery (ASVAB); Assets; Cognitive Ability; Financial Investments; Pensions; Taxes

Permission to reprint the abstract has not been received from the publisher.

Achieving policy objectives through the tax code may be compromised by the complexity of tax minimization strategies. To take advantage of favorable tax policy, consumers must understand the tax code and the potential benefits. Calculating the financial benefits of a tax policy can be difficult, especially when comparing tax-deferral strategies because the benefits will not be realized immediately. Roth IRAs provide a prime example of a deferred tax minimization tool because the tax benefits of a Roth IRA are not realized until retirement. This study analyzes the impact that cognitive ability has on the adoption of favorable tax strategies by following the adoption of the Roth IRA after its creation. Using data from the 2004 and 2008 administrations of the National Longitudinal Survey of Youth (NLSY), we hypothesize that higher cognitive ability is positively related to owning a Roth IRA and to early Roth IRA adoption. Consistent with our hypothesis, we find that cognitive ability is positively related to Roth IRA ownership and early adoption, even when controlling for education, income, and net worth. Individuals with higher cognitive ability are better able to legally minimize their tax liability, thereby maximizing household utility. If households with higher cognitive ability are better able to recognize and implement beneficial changes in the tax code, then tax policy will yield unintended distributional consequences. The complexity of tax minimization strategies also limits the ability of policy to modify household behavior in the ways envisioned by policymakers.
Bibliography Citation
Cummings, Benjamin F., Michael S. Finke and Russell N. III James. "The Impact of Cognitive Ability on Roth IRA Ownership." Working Paper, Social Science Research Network, October 2011.
5. Finke, Michael S.
Behavioral Determinants of Household Financial Choice: Three Essays
Ph.D. Dissertation, University of Missouri, July 2011
Cohort(s): NLSY79
Publisher: ProQuest Dissertations & Theses (PQDT)
Keyword(s): Armed Forces Qualifications Test (AFQT); Armed Services Vocational Aptitude Battery (ASVAB); Assets; Cognitive Ability; Financial Investments; I.Q.; Pearlin Mastery Scale; Pensions; Self-Perception; Self-Regulation/Self-Control; Taxes

Permission to reprint the abstract has not been received from the publisher.

This dissertation examines household characteristics the impact financial decision making. The first essay explores the role of cognitive ability in numeracy, risk tolerance, credit decisions, wealth and retirement savings and asset allocation and finds that cognitive ability is an important predictor of financial decisions. The second essay develops a new instrument to measure time discounting and models asset accumulation and asset allocation and finds that a factor score of intertemporal behaviors is significantly related to both asset accumulation and asset allocation. The third essay documents the decline in basic financial knowledge among households over 60 using a new financial literacy instrument developed to more accurately capture a household's ability to make effective balance sheet, credit, investment, and insurance choices.
Bibliography Citation
Finke, Michael S. Behavioral Determinants of Household Financial Choice: Three Essays. Ph.D. Dissertation, University of Missouri, July 2011.
6. Loving, Ajamu C.
Finke, Michael S.
Salter, John R.
Explaining the 2004 Decrease in Minority Stock Ownership
The Review of Black Political Economy 39,4 (December 2012): 403-425.
Also: http://link.springer.com/article/10.1007/s12114-012-9132-8
Cohort(s): NLSY79
Publisher: Springer
Keyword(s): Armed Forces Qualifications Test (AFQT); Assets; I.Q.; Racial Differences

Permission to reprint the abstract has not been received from the publisher.

Prior literature has examined minority stock market participation and found that it increased rapidly throughout the 1990’s and into the early 2000’s. However, in 2004 after stock prices had suffered decline, Black and Hispanic market participation fell off sharply. This paper uses the NLSY79, a panel data set, to examine whether the diminished likelihood of Black and Hispanic 2004 market participation is due to race or variation in cognitive ability and investor experience. We find that IQ and investor experience subsume all racial effects in the likelihood of 2004 market participation.
Bibliography Citation
Loving, Ajamu C., Michael S. Finke and John R. Salter. "Explaining the 2004 Decrease in Minority Stock Ownership." The Review of Black Political Economy 39,4 (December 2012): 403-425.