IDEAS home Printed from https://ideas.repec.org/a/ist/journl/v73y2024i1p281-314.html
   My bibliography  Save this article

Exploring the Impact of Behavioural Factors and Personality Traits on Private Pension System Participation: A Machine Learning Approach

Author

Listed:
  • Can Verberi

    (Sirnak University, Department of Economics, Sirnak, Turkiye)

  • Muhittin Kaplan

    (Ibn Haldun University, Department of Economics, Istanbul, Turkiye)

Abstract

This study aims to investigate the effects of personality traits, in addition to basic financial literacy, private pension literacy and behavioural factors on Private Pension System (PPS) participation using machine learning algorithms. The PPS participation model was trained using both random forest and LightGBM algorithms, and the contributions of model inputs in the prediction of pension participation were interpreted using the Tree SHAP algorithms with swarmplots. The data employed in the empirical analysis is survey data collected from the Şırnak province of Türkiye with a sample size of 449. The findings of the study shows that: (i) PPS participation is more likely for females and middle-aged people; (ii) High basic financial literacy has a negative impact on PPS participation; (iii) Extraversion is the key personality trait affecting PPS participation; (iv) Advanced pension literacy has more impact on participation than simple pension literacy: (v) Present-fatalistic tendency is key behavioural factor and it negatively affects PPS; (vi) Present-hedonistic, conscientiousness, future-time orientation, and locus of control tendencies increase PPS participation. Furthermore, the distribution of colours in LightGBM has a greater degree of uniformity in both directions compared with the random forest algorithm. Finally, to increase PPS participation, the results of the study suggest the implementation of the following policy measures: Tailored pension literacy programmes can help to increase pension participation rates. Incentives should be created to prevent narrow-minded behaviour and establish a sense of protection and control around PPS, targeting middle-aged individuals and women.

Suggested Citation

  • Can Verberi & Muhittin Kaplan, 2024. "Exploring the Impact of Behavioural Factors and Personality Traits on Private Pension System Participation: A Machine Learning Approach," Istanbul Journal of Economics-Istanbul Iktisat Dergisi, Istanbul University, Faculty of Economics, vol. 73(74-1), pages 281-314, June.
  • Handle: RePEc:ist:journl:v:73:y:2024:i:1:p:281-314
    DOI: 10.26650/ISTJECON2023-1360545
    as

    Download full text from publisher

    File URL: https://cdn.istanbul.edu.tr/file/JTA6CLJ8T5/D71F279BFEE4480BBC46A21083195F7E
    Download Restriction: no

    File URL: https://iupress.istanbul.edu.tr/tr/journal/ije/article/exploring-the-impact-of-behavioural-factors-and-personality-traits-on-private-pension-system-participation-a-machine-learning-approach
    Download Restriction: no

    File URL: https://libkey.io/10.26650/ISTJECON2023-1360545?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Tomar, Sweta & Kent Baker, H. & Kumar, Satish & Hoffmann, Arvid O.I., 2021. "Psychological determinants of retirement financial planning behavior," Journal of Business Research, Elsevier, vol. 133(C), pages 432-449.
    2. Thaler, Richard H & Shefrin, H M, 1981. "An Economic Theory of Self-Control," Journal of Political Economy, University of Chicago Press, vol. 89(2), pages 392-406, April.
    3. Shefrin, Hersh M & Thaler, Richard H, 1988. "The Behavioral Life-Cycle Hypothesis," Economic Inquiry, Western Economic Association International, vol. 26(4), pages 609-643, October.
    4. Sendhil Mullainathan & Jann Spiess, 2017. "Machine Learning: An Applied Econometric Approach," Journal of Economic Perspectives, American Economic Association, vol. 31(2), pages 87-106, Spring.
    5. Hasan Murat Ertugrul & Pinar Fulya Gebesoglu & Burak Sencer Atasoy, 2018. "Mind the gap: Turkish case study of policy change in private pension schemes," Borsa Istanbul Review, Research and Business Development Department, Borsa Istanbul, vol. 18(2), pages 140-149, June.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Deborah A. Cobb-Clark & Sonja C. Kassenboehmer & Mathias G. Sinning, 2013. "Locus of Control and Savings," Ruhr Economic Papers 0455, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
    2. James M. Poterba & Steven F. Venti & David A. Wise, 1996. "How Retirement Saving Programs Increase Saving," Journal of Economic Perspectives, American Economic Association, vol. 10(4), pages 91-112, Fall.
    3. Bo Becker & Zoran Ivković & Scott Weisbenner, 2011. "Local Dividend Clienteles," Journal of Finance, American Finance Association, vol. 66(2), pages 655-683, April.
    4. Graham, Fred & Isaac, Alan G., 2002. "The behavioral life-cycle theory of consumer behavior: survey evidence," Journal of Economic Behavior & Organization, Elsevier, vol. 48(4), pages 391-401, August.
    5. Szymon Chudziak, 2024. "Consumption Modelling Using Categorisation-Enhanced Mental Accounting," Computational Economics, Springer;Society for Computational Economics, vol. 64(3), pages 1391-1442, September.
    6. Kulchania, Manoj, 2013. "Catering driven substitution in corporate payouts," Journal of Corporate Finance, Elsevier, vol. 21(C), pages 180-195.
    7. Cobb-Clark, Deborah A. & Dahmann, Sarah C. & Kamhöfer, Daniel A. & Schildberg-Hörisch, Hannah, 2023. "Self-control and unhealthy body weight: The role of impulsivity and restraint," Economics & Human Biology, Elsevier, vol. 50(C).
    8. Trenton Smith, 2009. "Reconciling psychology with economics: Obesity, behavioral biology, and rational overeating," Journal of Bioeconomics, Springer, vol. 11(3), pages 249-282, December.
    9. Maier, Andreas, 2010. "Immobilienverzehrprodukte: Potenzielle Profiteure und Nachfragehemmnisse," Thuenen-Series of Applied Economic Theory 115, University of Rostock, Institute of Economics.
    10. Krieger, Kevin & Lee, Bong-Soo & Mauck, Nathan, 2013. "Do senior citizens prefer dividends? Local clienteles vs. firm characteristics," Journal of Corporate Finance, Elsevier, vol. 23(C), pages 150-165.
    11. Thomas F. Crossley & Peter Levell & Sofía Sierra Vásquez, 2024. "What would you do with £500? (...in your own words)," IFS Working Papers W24/38, Institute for Fiscal Studies.
    12. John Gathergood & Joerg Weber, 2012. "Self-Control, Financial Literacy and Co-Holding Puzzle," Discussion Papers 2012-02, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
    13. Beverly, Sondra G. & Sherraden, Michael, 1999. "Institutional determinants of saving: implications for low-income households and public policy," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 28(4), pages 457-473.
    14. Isabelle Brocas & Juan D. Carrillo, 2008. "The Brain as a Hierarchical Organization," American Economic Review, American Economic Association, vol. 98(4), pages 1312-1346, September.
    15. Drew Fudenberg, 2006. "Advancing Beyond Advances in Behavioral Economics," Journal of Economic Literature, American Economic Association, vol. 44(3), pages 694-711, September.
    16. repec:zbw:rwirep:0455 is not listed on IDEAS
    17. Gustavo Barboza, 2018. "I Will Pay Tomorrow, or Maybe the Day After. Credit Card Repayment, Present Biased and Procrastination," Economic Notes, Banca Monte dei Paschi di Siena SpA, vol. 47(2-3), pages 455-494, July.
    18. Cobb-Clark, Deborah A. & Kassenboehmer, Sonja C. & Sinning, Mathias G., 2016. "Locus of control and savings," Journal of Banking & Finance, Elsevier, vol. 73(C), pages 113-130.
    19. Milkman, Katherine L. & Beshears, John, 2009. "Mental accounting and small windfalls: Evidence from an online grocer," Journal of Economic Behavior & Organization, Elsevier, vol. 71(2), pages 384-394, August.
    20. Donkers, Bas & van Soest, Arthur, 1999. "Subjective measures of household preferences and financial decisions," Journal of Economic Psychology, Elsevier, vol. 20(6), pages 613-642, December.
    21. Marco Persichina, 2024. "Present Bias in Renewable Resource Management and Agent’s Welfare," Journal of Interdisciplinary Economics, , vol. 36(1), pages 79-97, January.

    More about this item

    Keywords

    Private pension system; Behavioural factors; Personality traits; Machine learning algorithms; Tree SHAP JEL Classification: C60 ; G41 ; J32;
    All these keywords.

    JEL classification:

    • C60 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - General
    • 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

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ist:journl:v:73:y:2024:i:1:p:281-314. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Ertugrul YASAR (email available below). General contact details of provider: https://edirc.repec.org/data/ifisttr.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.