Overall this thesis explores the age pattern of consumption of the Canadian elderly. Theoretical applications of the Life Cycle Hypothesis suggest that these consumption patterns should be constant in real terms as individuals age. However, most empirical work observes a declining pattern of consumption with age and health status. This thesis attempts to resolve this difference. The first chapter uses data from the Canadian National Population Health Survey. Using a comprehensive measure of health status, it finds that poor health explains the reduction in consumption (and its marginal utility), with most of the effect occurring among individuals whose income is above the median. The second chapter uses data from the Canadian Survey of Household Spending to explore the effect on non-healthcare consumption of falling into ill health. It finds that the effect on non-healthcare consumption varies by the level of a household's saving or dissaving. Non-healthcare consumption decreases by roughly 2.25% of after-tax income for those households that dissave 10% of their current year after-tax income or less. As households dissave larger and larger amount, however, the effect first becomes less negative, and then more positive. The third chapter develops a theoretical approach to calculating a life annuity value that produces optimal levels of annual consumption that reflect changes in utility based on health status and age. Relative to an annuity that produces a constant real stream of income for a healthy 65 year old male, the optimal stream of income starts roughly 2% higher and drops by 2% to 3% by age 80 and by a further 2% or so by age 95. This pattern of consumption is roughly equivalent to ignoring 15 to 20 basis points of annual inflation relative to an annuity that is fully indexed to inflation. / Thesis / Doctor of Philosophy (PhD)

There is worldwide concern that individuals are not saving sufficiently for retirement. Low savings rates, coupled with a lack of preservation of retirement funds when individuals move jobs, could have adverse repercussions on the ability to retire with sufficient funds. The traditional response to low preservation levels has been to impose taxes on cash withdrawals and a move is underway in South Africa to potentially mandate preservation. All these interventions assume that individuals are not acting rationally when they take a cash payout, however this assumption of irrationality has not been tested. Therefore, the aim of this study was to determine the factors that lead to low preservation levels in order to determine whether intervention is required to increase preservation, and if so, what form it should take. The study consisted of two phases. Phase one carried out a critical, multidisciplinary literature review to construct a conceptual model of the factors which potentially lead to low preservation levels. According to this model, these factors could arise from rational decision making in line with consumption smoothing behaviour linked to the life cycle hypothesis or irrational decision making arising from behavioural factors linked to bounded willpower or bounded rationality. The resultant model highlighted the distinct differences in the drivers of rational and irrational behaviour and therefore, the distinctly different interventions required. Phase two of the study focused on the empirical testing of the conceptual model to obtain an understanding of the relative importance of the factors. This phase made use of an analytical survey to test relationships between the predictor variables identified in the conceptual model, and the outcome variable which is whether the individual preserved funds when moving jobs. The data was analysed with logistic regression techniques. The study found that behavioural factors play an important role in explaining the preservation decisions made by individuals. In particular behavioural factors related to bounded rationality as a result of the inherent computational complexity of the decision making environment emerged as important explanatory variables. This appears to indicate that solutions should focus on decision support and guidance to assist individuals in making optimal decisions. This study makes a unique contribution to the field of retirement finance and decision making as it highlights the role that behavioural factors play in retirement preservation decisions. The implications regarding which interventions are best suited to assist in optimal decision iv making are informative for policy makers, providers of retirement products and financial advisors, as well as sponsors and members of retirement funds. / Thesis (PhD)--University of Pretoria, 2013. / lk2014 / Financial Management / Unrestricted

Previous research has shown time and risk preferences to be important factors when explaining a variety of behavioural patterns, such as smoking, obesity and savings behaviour, while we focus on the effect on financial behaviour and financial well-being. Financial behaviour is measured using a twelve-item scale with individuals’ self-stated reports of for example savings behaviour and credit card usage. To measure financial well-being, we construct a measure consisting of individual’s self-perceived current and future financial condition. Time preferences are revealed by matching questions and we use different ways of measuring risk, both self-stated risk attitudes and risky choices revealed by gambles. Our results show that increased short term patience, leads to better financial behaviour. Also, individuals with higher financial risk attitudes, exhibit better financial behaviour. Contradictory, regarding actual decisions, the impact is different and being loss averse, has a positive impact on financial behaviour. Financial well-being is on the other hand influenced positively by both more short and long term patience. It also increases with general and financial risk attitudes. Risky choices do not have an impact on financial well-being. We show that risk preferences are affected by time preferences. Having a high short term discount rate leads to higher financial risk attitudes and increases the likelihood of being loss averse, while it decreases the likelihood of being risk averse. Our results are important for understanding heterogeneity in financial decision making and the financial well-being it fathers. This quantitative study is based on a large, representative sample of the Swedish population (N=2063). / Tidigare forskning har visat att tids- och riskpreferenser är viktiga faktorer när man försöker förklara olika beteendemönster, såsom rökning, övervikt och sparande. Vi fokuserar på tids- och riskpreferensers effekt på finansiellt beteende och finansiellt välmående. Finansiellt beteende mäts genom tolv frågor, där individer exempelvis anger hur ofta man sparar eller använder kreditkort. För att mäta finansiellt välmående, konstruerar vi ett mått baserat på individens självupplevda nuvarande och framtida ekonomiska tillstånd. Tidspreferenser mäts genom “matching questions” och vi använder flera riskmått, både individers angedda riskattityder och riskfyllda val som visas genom riskfyllda spel. Våra resultat visar att ökat tålamod på kort sikt leder till bättre finansiellt beteende. Dessutom uppvisar individer med högre finansiella riskattityder bättre finansiellt beteende. I motsats till detta uppvisar dock, vid faktiska beslut, förlustaversiva individer bättre finansiellt beteende. Finansiellt välmående påverkas, å andra sidan, positivt av både kort- och långsiktigt tålamod. Det förbättras också av både högre generella och finansiella riskattityder. De riskfyllda valen påverkar inte finansiellt välmående. Vi visar att tidspreferenser påverkar riskpreferenser. Att ha högre tålamod på kort sikt leder till högre finansiell riskattityd och ökar sannolikheten för att vara förlustaversiv, medan det minskar sannolikheten att vara riskaversiv. Våra resultat är viktiga för att förstå heterogen finansiell beslutsfattning och det finansiella välmående det leder till. Denna kvantitativa studie baseras på ett stort, representativt sampel av den svenska befolkningen (N=2063).

Syfte: Syftet med studien är att analysera yngre vuxna i Stockholms sparbeteende inför inträdelsen på bostadsmarknaden utifrån livscykelhyoptesen. Teori: Den främsta teoritillämpningen för studien är livscykelhypotes om människans generella och rationella sparbeteende. Även Maslows behovshierarki behandlas då den angriper det social- psykologiska perspektivet angående behovet av att ha en bostad och Behavioral Finance angriper andra yttre faktorer som kan påverka huruvida en människa sparar eller inte. Metod: Studiens metodansats består av en metodkombination, detta innefattar en enkätundersökning med svarsalternativ som skedde inom Stockholmsområdet. Det innefattar även tre intervjuer med etablerade experter inom studiens område. Studien har en hermeneutisk vetenskapssyn och en abduktiv slutledningsform. Empiri: Presenterar den data som är mest relevant för studien från samtliga tre intervjuer och enkätundersökningen. Erhållen kvantitativ data presenteras i diagram. Slutsats: Studien påvisar att majoriteten av populationen anser att bostadsmarknaden är svår att inträda och att det är främst på grund av bostadsbrist och likvida skäl. Tendenser visar dock ett möjligt behov om att sparandet inför bostadsmarknadsinträdet bör läras ut och implementeras av individer i tidigare ålder, än vad livscykelhypotesen antyder. Föräldrar eller vårdnadshavare kan bli för ekonomiskt belastade på grund av delvis ökade bostadspriser. Därför bör barn samarbeta med deras föräldrar eller vårdnadshavare för att förebygga och bemöta bostadsmarknadsinträdet på ett optimalt sätt. Dock ska det tas i beaktning att alla hushåll eller privatpersoner inte har dessa ekonomiska förutsättningar för att efterfölja studiens generella och rationella sparbeteende.

De svenska hushållens skuldsättning har ökat markant sedan 1980-talet och är idag på rekordhöga nivåer. Utifrån detta har frågor kring skuldsättningsnivåns hållbarhet, dess makroekonomiska konsekvenser och bakomliggande faktorer, blivit allt vanligare. Tidigare studier på området visar på brister i standardteorin för analys av hushållens skuldsättning, livscykelhypotesen, då hänsyn inte tas till kreditrestriktioner eller människors oförmåga till helt rationellt handlande. En alternativ analysram fick förnyad uppmärksamhet i samband med finanskrisen i USA 2008 – Hyman Minskys hypotes om finansiell instabilitet – vilken inkorporerar ett fokus på spekulation på kredit- och tillgångsmarknader som förklaring till skuldsättning. Den här uppsatsen undersöker om Minskys hypotes kan appliceras på de svenska hushållen och förklara förändringen i skuldsättning sedan 1980-talet, genom en linjär regressionsmodell på aggregerad data för tidsperioden 1980 till 2012. Resultaten tyder på att den ökade skuldsättningen i stor utsträckning kan förklaras utifrån Minsky hypotes, där en avreglerad kreditmarknad och fallande räntenivåer verkar ha lett till en ökad spekulation i reala tillgångar, ökat risktagande hos både långivare och låntagare och därmed en ökad skuldsättning. / The debt level of Swedish households has increased noticeably since the 1980’s and is today at a record high level. This has given rise to questions regarding the sustainability of the debt level, its macroeconomic implications and driving factors. Previous studies on the subject show deficiencies in the standard theory for analyzing household debt, the life-cycle hypothesis, due to lack of consideration in the theory of credit restrictions and humans’ inability to act completely rationally. An alternative framework for analysis received renewed attention in connection with the financial crisis in the U.S. in 2008 – Hyman Minsky’s financial instability hypothesis – incorporating speculation in credit and asset markets as explanations for indebtness. This thesis investigates whether Minky’s hypothesis can be applied on Swedish households and explain the change in debt levels since the 1980’s, through a linear regression model, using aggregate data for the period 1980 to 2012. The results of the thesis indicate that the increased debt level to a large extent can be explained by Minsky’s hypothesis, where a de-regulated credit market and falling interest rates seem to have caused increased speculation in real assets, increased risk-taking by both debtors and creditors and thus an increased level of household debt.

This study examine the reactions in different portfolios under demographic changes for a deeper scope of the equity market. By six features: 1) beta 2) volatility 3) non-systematic risk 4) size 5) B/M 6) D/P, we distribute stocks into high or low level groups and test the reactions in each of these 12 portfolio. Empirical results in this study do suggest an increasing required risk premium for a growing population in retired-age (65+) group and a decreasing required risk premium for a growing population in middle-aged (44-64) group. Both effects in middle- and retired-age groups are stronger in a long time-horizon. Changes in demographic structure significantly add explanatory power to equity premium regressions involving Fama-French three factors. Moreover, we found retired-age population significantly demand more premium for high volatility stocks, growth stocks and large-cap stocks. However, there is no preference for any types of stock in middle-age population.

Die Arbeit basiert auf fünf Aufsätzen. In diesen wird über vier Experimentserien berichtet, die das individuelle Entscheidungsverhalten von Versuchspersonen in ähnlichen, aber verschieden komplexen Situationen erheben. Es wird ein experimentelles Szenario vorgestellt, mit dessen Hilfe Rückschlüsse auf das Sparverhalten gezogen werden können. Es werden stilisierte Fakten des Verhaltens realer Entscheider identifiziert, die sich in solchen Situationen wesentlich vom rationalen Verhalten des "homo oeconomicus" unterscheiden. Eine der Experimentserien wurde im Internet durchgeführt, wobei zusätzlich generelle Aspekte von Internetexperimenten untersucht werden. / This thesis is based on five studies. These studies report on the individual behavior of experimental subjects in four experiments. The experimental situations are similar, but differ in their complexity. With the introduced experimental setup, one can draw conclusions about savings behavior. Stylized facts about the behavior of real decision makers are identified, which differ in such situations substantially from the rational behavior of the "homo oeconomicus". One of the experiments was conducted via the Internet. In this part also general aspects of Internet experiments are investigated.

Bakgrund: Generation Y riskerar få en lägre pension i framtiden än de som går i pensionidag. För att upprätthålla en acceptabel levnadsstandard krävs därför att de själva tar stortansvar för sitt pensionssparande. Det finns dock stor risk att deras finansiella beslutpräglas av beteendefinansiella faktorer och deras nivå av finansiell bildning. Utöver detfattar personer i olika demografiska grupper olika finansiella beslut. Generation Ybeskrivs dessutom som otåliga och har visat sig ha dåliga finansiella vanor. För att enacceptabel levnadsstandard ska kunna uppnås för Generation Y även då de är pensionärerär det därför viktigt att förstå vilka faktorer som kan påverka deras långsiktiga sparande. Syfte: Syftet med denna studie är att undersöka hur beteendefinansiella faktorer,finansiell bildning samt demografiska faktorer samvarierar med svenska Generation Y:slångsiktiga sparande. Metod: Studien genomfördes med en kvantitativ metod där empiri i form av enkätdatabearbetats. En linjär multipel regressionsanalys har genomförts för att undersöka hur debeteendefinansiella faktorerna kortsiktighet, självkontroll och övertro, finansiell bildningsamt demografiska faktorer samvarierar med svenska Generation Y:s långsiktigasparande. Även t-tester har genomförts för att undersöka om skillnader för det långsiktigasparandet samt för de beteendefinansiella faktorerna förekommit för olika grupper. Slutsats: Studien visar att de beteendefinansiella faktorerna kortsiktighet, självkontrolloch övertro, samt den demografiska faktorn sysselsättning hade en statistiskt signifikantsamvariation med Generation Y:s långsiktiga sparande för studiens urval. Det fanns ävenstatistiskt signifikanta skillnader i nivå av kortsiktighet och övertro för olikademografiska grupper. / Background: Generation Y is at risk for a substantially lower public retirement incomparison to today's retirees. Therefore, it is of great importance that Generation Yunderstands the necessity of private savings to be able to maintain a sustainable standardof living throughout their lives. However, Generation Y's financial decisions might beinfluenced by behavioral biases, financial literacy and various demographic factors. Inaddition, Generation Y is described as impatient and have been found to haveunsustainable financial habits. For them to maintain a sustainable standard of livingthroughout their lives, it is therefore of great importance to understand what factors thatcorrelate with their long-term saving behaviour. Purpose: The purpose of this thesis is to examine how behavioural biases, financialliteracy and demographic factors correlate with the long-term saving behaviour amongthe Swedish Generation Y. Methodology: To adequately approach this study a quantitative research method hasbeen applied. The data was collected from a survey. A linear multiple regression analysiswas performed to examine the correlation between long-term saving and behaviouralbiases, financial literacy and demographic factors. Furthermore, t-tests were performedto examine the differences in the level of long-term savings and behavioural biases amongsub-groups. Conclusion: The study concludes that the behavioural biases present bias, self-controland overconfidence, and the demographic factor occupation had statistically significantcorrelations with the long-term savings of the Swedish Generation Y with regard to thesample in this study. Furthermore, there were statistically significant differences in thelevel of present bias and overconfidence in different demographic groups.

Titel: Att spara eller inte spara? - En studie om universitetsstudenters sparande och vad som påverkar sparbeteendet Författare: Edvin Pettersson och Sandra Trinh Handledare: Camilla Strömbäck Bakgrund: Enligt livscykelhypotesen är det irrationellt för studenter att spara pengar. Däremot utifrån ett riskhanteringsperspektiv finns det anledningar till att spara vilket inte överensstämmer med livscykelhypotesen. Utöver denna diskrepans har tidigare forskning visat att det finns flera faktorer som kan påverka en individs sparande. Dock har tidigare forskning ofta varit kvantitativ och enbart fokuserat på hur en faktor påverkar sparande men inte om faktorerna påverkar varandra eller givit en bred bild över området. Syfte: Syftet med studien är att undersöka svenska universitetsstudenters sparande och behovet av det utifrån ett riskhanteringsperspektiv, samt identifiera, analysera och systematisera vilka faktorer som påverkar sparandet. Genomförande: För att besvara studiens syfte har en kvalitativ metod använts där semistrukturerade intervjuer har genomförts med tio svenska universitetsstudenter. Utifrån tidigare forskning uppmärksammades fem faktorer som påverkar sparande. Dessa faktorer låg sedan till grund för intervjuguiden och analysmodellen som skapades. Slutsats: Utifrån ett riskhanteringsperspektiv är det rationellt för svenska universitetsstudenter att spara. Det har gjort att de kan hantera likviditetskriser samt bygga upp ett eget kapital för att kunna ta lån i framtiden. Mental bokföring och finansiell bildning har gjort det enklare för studenterna att hantera sina självkontrollsproblem vilket har möjliggjort att de kan spara. / Title: To save or not to save? - A study about university students’ saving and what affects the saving behavior Authors: Edvin Pettersson and Sandra Trinh Supervisor: Camilla Strömbäck Background: According to the life cycle hypothesis, it is irrational for university students to save money. However, it might be necessary for university students to have a savings buffer to be able to manage liquidity risks and to afford more expensive purchases. Previous research has shown that there are several factors that affect a person’s saving behavior, but it has yet to investigate how different factors work together to affect the saving behavior. Aim: The aim of this study is to examine Swedish university students’ savings and the need for from a risk management perspective, as well as identify, analyze, and systematize which factors affect the saving behavior. Completion: To answer the research questions we have completed semi-structural interviews with ten Swedish university students. This study has used a qualitative method to be able to examine how students reflect on the needs to have savings and to identify if different factors work together to affect the university students’ saving behavior. From previous research we have identified five factors that affect a person’s saving behavior and these factors have been the basis for the creation of the interview guide and the model of analysis. Conclusion: From a risk management perspective it is rational for Swedish university students to save money to be able to manage their liquidity risks and build up their equity to enable loans in the future. Both mental accounting and financial literacy have been helpful for the students to practice self-control, which has made it possible for the students to save money.

In South Africa, less than 10% of individuals are financially independent after retirement, with an increasing number becoming dependent on social grants from government – hence the importance of analysing the asset composition of high net worth individuals who have achieved financial independence. To achieve the aim of this study, it was first necessary to define net worth and to develop a theoretical framework of the assets and liabilities included in the measurement of an individual’s net worth and how these assets and liabilities should be valued. A definition of high net worth individuals was then formulated. Secondly, the factors influencing the asset composition of high net worth individuals, as well as selected demographic factors that influence net worth, were investigated. Finally, following a quantitative approach, data collected from the liquidation and distribution accounts of deceased individuals were analysed according to the developed framework. The results of this study suggest that are indeed differences in the contribution of the different asset types when measured using the mean, relative contribution and importance of the asset class in comparison with total assets. Further analysis revealed that the richest individuals included in the survey invested more in shares than the other groups for whom immovable property was the primary asset. Based on the analysis of selected demographic factors, the findings indicated that for many of the dependent variables, the asset used most by respondents in that group was not the same asset that made the highest contribution to the net worth of the individuals in the group. / Business Management / M. Com. (Accounting)