The Psychology of Financial Consumer Behavior (eBook)

Dominika Maison is a Professor working at the Faculty of Psychology at the University of Warsaw and owner of the marketing research company Maison & Partners specialised in research for financial sector. Her main scientific research is connected to psychological processes underlying financial behaviour, unconscious consumer processes, methodology of marketing research, especially qualitative methodology, cause-related marketing, and pro-social behavior. 

Preface 6
Contents 9
About the Author 12
Chapter 1: The Psychological Perspective in Financial Behaviour 13
1.1 Changes in Looking at the Human Being and Its Consequences for Understanding Financial Behaviour 13
1.1.1 From Full Rationality to Biased Decisions: Behavioural Economics 14
1.1.2 From Rational to Nonrational, from Controlled to Automatic Reactions: The Psychology of Social Cognition 16
1.2 Individual Differences in Financial Behaviour 19
1.2.1 Psychological Non-specific Traits: Big Five 20
1.2.2 Psychological Non-specific Traits: Individual Traits Outside of the Big Five 25
1.2.3 Psychological Specific Traits (connected to finances) 34
1.3 Financial Typology: From Banking Leaders to the Financially Withdrawn 37
References 51
Chapter 2: Richness: How Much Money Do We Have and How Do We Think About It? 62
2.1 Three Dimensions of Financial Situation: Objective (Income), Subjective (Perception), and Relative (Effect of Social Comparisons) 62
2.2 The Power of Perception: Financial Optimists Versus Pessimists 65
2.3 Does Money Bring Happiness? 67
2.4 Financial Situation Versus Satisfaction with Life: Own Study 70
2.5 The Psychological Background of Financial Satisfaction: Which Psychological Factors Influence the Perception of Financial Satisfaction? 73
2.6 Through Money to Happiness or Through Happiness to Money? 78
References 80
Chapter 3: Spending Money: Pleasure or Pain? Why Some People Spend Money Easily While Others Have a Problem with It? 84
3.1 Functional Versus Emotional Role of Money 84
3.2 Subjective Value of Money and Prices 86
3.3 Mental and Emotional Accounting 88
3.3.1 Mental Accounting: The Drawers and Compartments of the Brain 88
3.3.2 Emotional Accounting: The Meaning of the Source of Money 89
3.4 Psychological Factors Influencing Spending: Non-specific Factors (Not Connected to Financial Behaviour) 92
3.5 Psychological Factors Influencing Spending: Specific Factors (Connected to Financial Behaviour) 95
3.6 Money Spending Style (Own Concept): Individual Factors Determining Spending Differences 97
3.6.1 Money Spending Style Versus Emotions and Satisfaction with Life and Finances 100
3.6.2 Money Spending Style and Non-specific Psychological Variables 101
3.6.3 Money Spending Style and Materialism 103
3.6.4 Qualitative Exploration of MSS 103
High Control of Spending: Thrifty Spending Versus Belt Tightening. 104
Low Control of Spending: Happy Spending Versus Spendthrift 106
Attitudes Towards Money in Persons with Different Money Spending Styles 108
References 111
Chapter 4: Saving and Investing 115
4.1 Why Is Saving Important? 115
4.2 Why Do People Save: Different Approaches to Saving Mechanisms 118
4.2.1 LCH: Life-Cycle Hypothesis 118
4.2.2 The Behavioural Life-Cycle Hypothesis 119
4.2.3 The Typology of Saving According to George Katona 121
4.3 Saving Strategies 121
4.4 Saving Motives and Goals: Why Do People Save and What Do People Save for? 123
4.5 Individual Determinants of Saving 127
4.6 Having Savings and the Amount of Savings Held (Own Study) 131
4.7 Investing: A Higher Level of Saving 136
4.8 Cultural Determinants of Saving and Investing 142
References 146
Chapter 5: Loan: Needed or Wanted? 152
5.1 Indebtedness and Everyday Functioning 152
5.2 External Factors Determining Borrowing 155
5.3 Knowledge, Skills, and Attitudes as the Determinants of Consumer Debt 157
5.4 Impact of Psychological Non-specific (Not Related to Finances) Characteristics on Taking on Debt and Paying It Off 162
5.5 Impact of Psychological Characteristics (Specific, Connected to Finances) on Taking on Debt and Paying It Off 165
5.6 Borrowing Money and Saving 168
5.7 Segmentation of Debtors: Own Study 173
5.7.1 Segment 1: Forgetful (24%) 176
5.7.2 Segment 2: Indebted for Others (24%) 178
5.7.3 Segment 3: Carefree (19%) 180
5.7.4 Segment 4: Lost in Finances (18%) 181
5.7.5 Segment 5: Avoiders (12%) 183
5.8 Individual Predictors of Debt and Debt Repayment 185
References 188
Chapter 6: Banking, Unbanking, and New Banking 193
6.1 Why Do Some People Not Have Bank Accounts? 193
6.1.1 How to Increase the Level of Banking – A Diagnosis of Barriers to Having a Bank Account (Own Study) 197
6.2 Love for Cash: Psychological Barriers to Cashless Transactions 202
6.3 Levels of Banking: From Cash to Full Cashless Societies 208
References 214
Appendix 1: Demographic Structure of Sample of FinBehTrack 2016 217
Appendix 2: FinBehTrack 2016 – Questionnaire 218
Part 1. Life Satisfaction (LS) 218
Part 2. Approach to Life (AL) 219
Part 4. Banking Products (BP) 223
Part 5. Saving and Investing (S) 224
Part 6. Borrowing – Loans and Credits (LC) 225
Part 7. Payment Cards (PC) 226
Part 8. New Technologies (NT) 227
Part 10. Insurance 228
Part 12. Money Spending Style (MSS) 229
Part 13. Saving and Investing (SAV) 230
Part 14. Love for Cash (LfC) 232
Part 15. Attitude to Money and Material Possessions (MAT) 233
Part 19. Financial Situation (FS) 234
Index 237