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http://ssrn.com/abstract=1665943
 
 

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An Experimental Survey of Investment Decisions for Retirement Savings


Hazel Bateman


University of New South Wales (UNSW) - School of Actuarial Studies, Centre for Pensions and Superannuation; Centre for International Finance and Regulation (CIFR)

Susan Thorp


University of Technology Sydney (UTS) - School of Finance and Economics; Financial Research Network (FIRN); Centre for International Finance and Regulation (CIFR)

Jordan J. Louviere


University of Technology Sydney (UTS) - Centre for the Study of Choice

Towhidul Islam


University of Guelph - Department of Marketing and Consumer Studies

Stephen E. Satchell


University of Cambridge - Faculty of Economics and Politics

August 25, 2010

UNSW Australian School of Business Research Paper No. 2010ACTL09

Abstract:     
We conducted a choice experiment to investigate whether retirement savers follow simple portfolio theory when choosing investments. We modeled experimental survey data on 693 participants using a scale-adjusted version of the latent class choice model. Results show that underlying variability in response was explained by age and “risk profile” score, and that preferences varied with income and age. Younger individuals were conventionally risk averse but older, higher income individuals may react positively to both higher returns and increasing risk, when risk is presented as widening ranges of possible outcomes. Respondents tended to choose among a few similar investments options. Findings should assist regulators and providers to target assistance to “at risk” retirement savers.

Number of Pages in PDF File: 41

Keywords: Investment choice, retirement savings, investment risk

JEL Classification: G23, G28, D14

working papers series


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Date posted: August 26, 2010 ; Last revised: April 18, 2011

Suggested Citation

Bateman, Hazel and Thorp, Susan and Louviere, Jordan J. and Islam, Towhidul and Satchell, Stephen E., An Experimental Survey of Investment Decisions for Retirement Savings (August 25, 2010). UNSW Australian School of Business Research Paper No. 2010ACTL09. Available at SSRN: http://ssrn.com/abstract=1665943 or http://dx.doi.org/10.2139/ssrn.1665943

Contact Information

Hazel Bateman
University of New South Wales (UNSW) - School of Actuarial Studies, Centre for Pensions and Superannuation ( email )
High Street
Sydney, NSW 2052
Australia

Centre for International Finance and Regulation (CIFR) ( email )
Level 7, UNSW CBD Campus
1 O'Connell Street
Sydney, NSW 2000
Australia

Susan Thorp (Contact Author)
University of Technology Sydney (UTS) - School of Finance and Economics ( email )
Haymarket
Sydney, NSW 2007
Australia
HOME PAGE: http://www.business.uts.edu.au/finance/
Financial Research Network (FIRN)
C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia
HOME PAGE: http://www.firn.org.au

Centre for International Finance and Regulation (CIFR) ( email )
Level 7, UNSW CBD Campus
1 O'Connell Street
Sydney, NSW 2000
Australia

Jordan J. Louviere
University of Technology Sydney (UTS) - Centre for the Study of Choice ( email )
Level 4
645 Harris Street
Ultimo, New South Wales NSW 2007
Australia
Towhidul Islam
University of Guelph - Department of Marketing and Consumer Studies ( email )
50 Stone Road West
Guelph, Ontario
Canada
Stephen E. Satchell
University of Cambridge - Faculty of Economics and Politics ( email )
Austin Robinson Building
Sidgwick Avenue
Cambridge, CB3 9DD
United Kingdom
44 (0)1223 335213 (Phone)
44 (0)1223 335475 (Fax)
HOME PAGE: http://www.econ.cam.ac.uk/faculty/satchell/index.h
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