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An Experimental Survey of Investment Decisions for Retirement SavingsHazel BatemanUniversity of New South Wales (UNSW) - School of Actuarial Studies, Centre for Pensions and Superannuation Susan ThorpUniversity of Technology, Sydney (UTS) - School of Finance and Economics; Financial Research Network (FIRN) Jordan J. LouviereUniversity of Technology, Sydney (UTS) - School of Marketing Towhidul IslamUniversity of Guelph - Department of Marketing and Consumer Studies Stephen E. SatchellUniversity 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 seriesDate posted: August 26, 2010 ; Last revised: April 18, 2011Suggested CitationContact Information
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