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Subjective self-control but not objective measures of executive functions predicts financial behavior and well-being

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  • Strömbäck, Camilla
  • Skagerlund, Kenny
  • Västfjäll, Daniel
  • Tinghög, Gustav

Abstract

Executive functions consist of three separable but correlated functions; inhibition, working memory, and shifting. Here we used an extensive and validated battery of objective performance measures of executive functions and intelligence to investigate if individual differences in these cognitive abilities can explain sound financial behavior and subjective financial well-being. Additionally, we measured a set of self-reported personality traits, including self-control, optimism, and deliberative thinking. We found that neither executive functions nor intelligence was associated with sound financial behavior and financial well-being in our sample. Although objective self-control, measured as the ability to override impulses (i.e. inhibition), could not be linked to financial behavior and financial wellbeing, subjective (i.e. self-reported) self-control had a strong positive effect. This indicates that the ability to avoid financial temptation is more important than the cognitive ability to override impulses when it comes to sound financial behavior and financial well-being.

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  • Strömbäck, Camilla & Skagerlund, Kenny & Västfjäll, Daniel & Tinghög, Gustav, 2020. "Subjective self-control but not objective measures of executive functions predicts financial behavior and well-being," Journal of Behavioral and Experimental Finance, Elsevier, vol. 27(C).
    • Handle: RePEc:eee:beexfi:v:27:y:2020:i:c:s2214635019301893
    DOI: 10.1016/j.jbef.2020.100339
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    2. Barrafrem, Kinga & Västfjäll, Daniel & Tinghög, Gustav, 2020. "Financial well-being, COVID-19, and the financial better-than-average-effect," Journal of Behavioral and Experimental Finance, Elsevier, vol. 28(C).
    3. Kienzler, Mario & Västfjäll, Daniel & Tinghög, Gustav, 2022. "Individual differences in susceptibility to financial bullshit," Journal of Behavioral and Experimental Finance, Elsevier, vol. 34(C).
    4. Barrafrem, Kinga & Tinghög, Gustav & Västfjäll, Daniel, 2021. "Trust in the government increases financial well-being and general well-being during COVID-19," Journal of Behavioral and Experimental Finance, Elsevier, vol. 31(C).
    5. Shekinah E. Dare & Wilco W. Dijk & Eric Dijk & Lotte F. Dillen & Marcello Gallucci & Olaf Simonse, 2023. "How Executive Functioning and Financial Self-efficacy Predict Subjective Financial Well-Being via Positive Financial Behaviors," Journal of Family and Economic Issues, Springer, vol. 44(2), pages 232-248, June.
    6. Tinghög, Gustav & Ahmed, Ali & Barrafrem, Kinga & Lind, Thérèse & Skagerlund, Kenny & Västfjäll, Daniel, 2021. "Gender differences in financial literacy: The role of stereotype threat," Journal of Economic Behavior & Organization, Elsevier, vol. 192(C), pages 405-416.
    7. Osvaldo García-Mata & Mariana Zerón-Félix, 2022. "A review of the theoretical foundations of financial well-being," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 69(2), pages 145-176, June.

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