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Franco, Forum 2 - Discussion week
2
Advanced Business Research Methods (Liberty
University)
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DNA Analysis and Financial Behavior 1
Discussion: DNA Analysis and Financial Behaviors
Maria Franco-Cortes
Liberty University
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DNA Analysis and Financial Behavior 2
Discussion: DNA Analysis and Financial Behaviors
Behavioral finance has been integrating insights from different perspectives. DNA
analysis and financial behavior are one of the areas discussed over time by many authors. It is
also associated with non-financial domains of life, so studies have suggested the application of
planning and education to make better decisions and therefore improve financial behavior (Kim,
& Lee, 2020). The exploration of different studies and viewpoints provides a better insight into
financial behavior and what research needs to be addressed in the next years.
What is the current state of research in these areas?
Frydman and Camerer consider that the cognitive science principle explains why many
financial decisions are affected by overconfidence and personal history. The departures occur at
all levels in the economy (From households to CEOs). “The literature in behavioral finance has
forcefully demonstrated that these robust decision anomalies have important consequences for
individual investor wealth, stock market prices, and regulatory policy (Frydman & Camerer,
2016).” Besides, the authors affirm that some progress has been made thanks to the collaboration
between behavioral economic theory and new data sources, which is critical in measuring
variables that lead to real financial decision making.
Kyoung Tae Kim and Jae Min Lee analyzed financial behavior based on keywords, data
collection, and geographic location. The significant findings include the fact that research in
personal finance has gained popularity in the past decade. Second. “researchers have applied
various analytical models to investigate financial behavior of individuals and households (Kim &
Lee, 2020).” Third, many studies have identified financial behavior empirically as a determinant
of, or related to, various factors. Fourth, financial behavior is not a static concept and changes
over time within an individual or household and interacts with the environment. Fifth, these
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DNA Analysis and Financial Behavior 3
types of studies can offer policy implications to increase consumer welfare in society. Sixth,
“global financial markets and the transformation of technology have accelerated the
interdependence and connectedness of financial consumers and reshaped consumer experiences,
to evolving financial behaviors and issues (Kim & Lee, 2020).”
“Financial behaviors are grounded in family financial socialization, and its effects
continue well into people’s life course (Vosylis & Erentaitė, 2019).” The authors conducted a
cross-sectional study to address the dimensionality of family financial socialization practices.
Financial socialization practices have different effects on the outcomes. For example, parents
that teach about money management are related to favorable outcomes lie lower financial
anxiety and higher spending self-control. Also, financial identity plays a vital role in this process
as it is associated with higher self-efficacy, higher controllability, and higher financial
knowledge (Vosylis & Erentaitė, 2019).
It is crucial to understand how subjective knowledge and sound behavior improve
financial well-being. “Financial well-being is the ability to meet the needs and responsibilities of
current and anticipated lifestyle (Riitsalu & Murakas, 2019).” This article contributes to
financial literacy, subjective financial knowledge, and financial well-being. The results show
that financial success is not only based on motivation but also in taking advantage of educational
programs that promote problem-solving and provide tools to understand the stock market and
other
topics.
A study was performed to analyze survey data from a sample of 551 Swedish citizens. “A
significant impact of fact-based and subjective financial literacy is found on three time-ordered
stages of individuals’ retirement behavior: planning, saving, and investment management (Hauff,
Carlander, Gärling, & Nicolini, 2020).” The authors argue that one of the causes of someone not
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DNA Analysis and Financial Behavior 4
taking financial responsibility is the lack of financial knowledge and skill. Likewise, the study
proof that financial literacy makes a difference when deciding to save for retirement or
making an investment.
What has been researched that further contributes to this particular area?
The Literature in behavioral finance demonstrated that psychology has a massive impact
on patterns like saving, investing, and trading behavior. However, to understand the neural
computations underlying the effects of social contagion and media reporting on stock price
movements, research is needed (Frydman & Camerer, 2016). In future research, psychological
factors and future-oriented financial well-being should be included (Riitsalu & Murakas, 2019).
On the other hand, Vosylis & Erentaitė (2019) suggest that future research would benefit from a
broader investigation of cultural practices that would involve a more diverse sample of
participants and both student and parent to understand the socialization processes (p. 10). Hauff,
Carlander, Gärling, & Nicolini (2020) suggest future research on the relationship between
financial literacy and financial behavior like switching banks using credit cards (p. 19). Finally,
to analyze further studies can use other types of methods, such as longitudinal data or
experimental designs, and improve measurement’s sophistication and justification (Kim & Lee,
2020).
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DNA Analysis and Financial Behavior 5
References
Frydman, C., & Camerer, C. F. (2016). The Psychology and Neuroscience of Financial Decision
Making. Trends in Cognitive Sciences, 20(9), 661–675.
https://doi.org/10.1016/j.tics.2016.07.003
Hauff, J. C., Carlander, A., Gärling, T., & Nicolini, G. (2020). Retirement Financial Behaviour:
How Important Is Being Financially Literate? Journal of Consumer Policy. Journal of
Consumer Policy, 43(3), 543-564.
http://dx.doi.org.ezproxy.liberty.edu/10.1007/s10603- 019-09444-x
Kim, K. T., & Lee, J. M. (2020). A Review of a Decade of Financial Behavior Research in the
Journal of Family and Economic Issues. Journal of Family and Economic Issues, 1–
11. https://doi.org/10.1007/s10834-020-09711-x
Riitsalu, L., & Murakas, R. (2019). Subjective financial knowledge, prudent behaviour
and income. International Journal of Bank Marketing, 37(4), 934–950.
https://doi.org/10.1108/ijbm-03-2018-0071
Vosylis, R., & Erentaitė, R. (2019). Linking Family Financial Socialization with Its Proximal
and Distal Outcomes: Which Socialization Dimensions Matter Most for Emerging
Adults’ Financial Identity, Financial Behaviors, and Financial Anxiety? Emerging
Adulthood, 8(6), 464–475. https://doi.org/10.1177/2167696819856763
