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Financial Decision-Making Responsibility and Household Wealth Accumulation Among Older Adults: A Comparative Advantage Perspective

Financial Decision-Making Responsibility and Household Wealth Accumulation Among Older Adults: A... This article introduces collective rationality and comparative advantage into understanding household financial decision-making responsibility allocation and its relationship to wealth accumulation. Evidence from the Health and Retirement Study (HRS) shows that conscientiousness, memory, and numeracy are favorable personal attributes for household financial decision-making. Greater relative advantages in these attributes predict a higher probability of assuming financial responsibility. Households that assign the disadvantaged spouse as the financial decision-maker tend to have a lower total net worth and a lower financial net worth. Our results suggest that it is critical for financial planning professionals to engage both spouses in the initial discussion of household finances and to assess the efficiency of the status quo financial decision-making responsibility allocation. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Financial Counseling and Planning Springer Publishing

Financial Decision-Making Responsibility and Household Wealth Accumulation Among Older Adults: A Comparative Advantage Perspective

Journal of Financial Counseling and Planning , Volume 33 (1): 21 – May 2, 2022

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Publisher
Springer Publishing
Copyright
© 2022 Springer Publishing Company
ISSN
1052-3073
eISSN
1947-7910
DOI
10.1891/jfcp-19-00075
Publisher site
See Article on Publisher Site

Abstract

This article introduces collective rationality and comparative advantage into understanding household financial decision-making responsibility allocation and its relationship to wealth accumulation. Evidence from the Health and Retirement Study (HRS) shows that conscientiousness, memory, and numeracy are favorable personal attributes for household financial decision-making. Greater relative advantages in these attributes predict a higher probability of assuming financial responsibility. Households that assign the disadvantaged spouse as the financial decision-maker tend to have a lower total net worth and a lower financial net worth. Our results suggest that it is critical for financial planning professionals to engage both spouses in the initial discussion of household finances and to assess the efficiency of the status quo financial decision-making responsibility allocation.

Journal

Journal of Financial Counseling and PlanningSpringer Publishing

Published: May 2, 2022

References