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The Importance of Behavioural Factors for Pension Savings Decisions – Cross-Country Evidence

Author

Listed:
  • Anna Kaliciak

    (University of London, United Kingdom)

  • Radosław Kurach

    (Faculty of Economic Sciences, Wrocław University of Economics, Poland)

  • Walid Merouani

    (Centre de Recherche en Économie Appliqué pour le Développement (CREAD, Algeria)
    Centre de Recherche en Economie et Management (CREM-CNRS, France))

Abstract

In this study, we challenge the problem of inadequate voluntary pension savings by exploring the micro-dataset of the Luxembourg Wealth Study (LWS) for three countries: Italy, the United Kingdom and the United States. The existing empirical literature usually focuses on the role of sociodemographic factors to understand this phenomenon, and theoretical studies additionally highlight the role of behavioural factors. However, empirical studies in this field are extremely scarce. The use of the LWS data enables us to fill this research gap. Separately for each country, we verify the role of individuals’ risk attitudes and intertemporal choices in the demand for voluntary pension savings. To make the results more robust, we add a set of socio-demographic control variables to our regressions. Our findings clearly reveal that being more risk averse and being less forward looking negatively affect people’s propensity to save for retirement. Furthermore, we confirm that age, gender and education are significant predictors of pension demand in each of the analysed countries. We argue that these conclusions have practical meaning to improve regulatory frameworks.

Suggested Citation

  • Anna Kaliciak & Radosław Kurach & Walid Merouani, 2019. "The Importance of Behavioural Factors for Pension Savings Decisions – Cross-Country Evidence," Acta Oeconomica, Akadémiai Kiadó, Hungary, vol. 69(3), pages 357-391, September.
    • Handle: RePEc:aka:aoecon:v:69:y:2019:i:3:p:357-391
    Note: a) We are thankful to Jeffrey R. Brown, Christos Koulovatianos, Maureen Maloney, Edyta Marcinkiewicz and Piotr Paradowski for their constructive remarks on the earlier version of this manuscript. We would also like to acknowledge the participants of the 2nd Old-Age Security Conference (Wrocław, 2016) and the LIS/LWS Users Conference (Belval Campus, Luxembourg, 2017) for their encouragement. Last but not least, the insightful comments made by the anonymous reviewers are much appreciated. All remaining errors are our own. b) The research was supported under the European Commission’s 7th Framework Programme (FP7/2013-2017, grant No. 312691). c) The preliminary results have been also published in LWS Working Paper Series, No. 23, 2016. http://www.lisdatacenter.org/wps/lwswps/23.pdf
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    Citations

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    Cited by:

    1. Kateřina GAWTHORPE, 2022. "Population ageing and sustainable fiscal policy in Czechia," Eastern Journal of European Studies, Centre for European Studies, Alexandru Ioan Cuza University, vol. 13, pages 81-105, June.
    2. Walid Merouani & Claire El Moudden & Nacer Eddine Hammouda, 2021. "Social Security Enrollment as an Indicator of State Fragility and Legitimacy: A Field Experiment in Maghreb Countries," Social Sciences, MDPI, vol. 10(7), pages 1-25, July.

    More about this item

    Keywords

    supplementary pension savings; risk aversion; intertemporal choices; socio-demographic factors; Tobit models;
    All these keywords.

    JEL classification:

    • C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions; Probabilities
    • G41 - Financial Economics - - Behavioral Finance - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making in Financial Markets
    • J32 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Nonwage Labor Costs and Benefits; Retirement Plans; Private Pensions

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