Doctor of Philosophy, The Ohio State University, 2020, Consumer Sciences

This dissertation consists of three related research studies on life insurance holdings and financial capability. The first research study investigates the association of risk aversion in single-parent households with at least one child under age 18 with life insurance ownership. Analyzing the 1992 to 2013 Survey of Consumer Finances datasets, it reveals that the probability of ownership of term life insurance declines as risk aversion increases, while the probability of owning cash-value life insurance increases as risk aversion increases. Smokers, an alternative measure of risk tolerance, are less likely to have term life insurance but more likely to have cash-value life insurance than comparable non-smokers. The second research study examines the adequacy to which households protect against financial risk in the event of the death of the income earners. Findings show which household characteristics are associated with being adequate in financial protection with newly improved measurements. Analyzing the 2016 Survey of Consumer Finances, this study also investigates the role financial knowledge for the adequacy of financial protection using an innovative instrumental variable approach for financial knowledge. Findings suggests that two distinct constructs of financial knowledge, objective and subjective financial knowledge, are significant determinants of the adequacy of financial protection. The results shed light on the importance of financial knowledge for the protection against financial shocks. Focusing on lower-income adults who are nearing retirement, the third research study explores the relationship between financial-planning behaviors (paying bills on time, emergency savings, and retirement planning) and two key components of financial capability, financial education and financial inclusion. Using data from the 2015 National Financial Capability Study, the results point to the important role of financial inclusion for financial-planning behavio (open full item for complete abstract)

Committee: Loibl Cäzilia (Advisor); Hanna Sherman (Committee Member); Scharff Robert (Committee Member); Montalto Catherine (Committee Member); Snyder Anastasia (Committee Member) Subjects: Home Economics

Doctor of Philosophy, The Ohio State University, 2015, Human Ecology: Family Resource Management

This study focused on households' expectations of the likelihood of a substantial income decrease during the Great Recession, and examined whether or not they behaved rationally based on the rational expectation hypothesis. In Study 1, the objective was to examine which factors were related to whether households experienced substantial income decreases during the recession. The 2007-2009 Panel of the Survey of Consumer Finances (SCF) was used to estimate the likelihood that a household would have a decrease in income of at least 50% between 2006 and 2008. Over 8% of U.S. households experienced at least a 50% decrease in income, and a logistic regression model showed that many household characteristics were related significantly to the probability of suffering such a dramatic decrease. From the results of Study 1, the estimated likelihood that households would experience a substantial decrease in income was used as an independent variable in Study 2. In economics, the rational expectation hypothesis posits that if rational households expect future income to decrease, current saving should increase. Thus, the purpose of Study 2 was to examine whether or not households behaved in a rational manner in holding emergency funds, based on having a substantial income decrease. In Study 2a, the ratio of monetary assets to spending in 2007 was regressed on the likelihood of having a substantial decrease in income decrease. The higher the likelihood of a substantial income decrease, the higher the ratio, controlling for other household characteristics in 2007. In Study 2b, the ratio of the subjective need for emergency funds to estimated annual spending in 2007 was used as a dependent variable. The estimated likelihood of a substantial income decrease was related positively to the ratio of subjective need to spending. Not only households' actual behavior in accumulating liquid assets, but also their perceptions of the need for emergency funds were related positively to the li (open full item for complete abstract)

Committee: Sherman Hanna (Advisor); Robert Scharff (Committee Member); Tansel Yilmazer (Committee Member) Subjects: Families and Family Life; Home Economics

Doctor of Philosophy, The Ohio State University, 2014, Human Ecology: Family Resource Management

With increasing income uncertainty during the Great Recession, many households might have had difficulty in projecting future income changes. Ideally, a household should consider lifetime wealth and the distinction between transitory and permanent income changes in making saving decisions, but during the Great Recession it was probably very difficult for households to identify which income changes were transitory. Gain-loss utility based on prospect theory assumes that household inter-temporal decisions are determined not only by current or permanent income but also by their own expectations or assessment about income and income uncertainty in the first period. In this study, how households' perception of their past and future income compared to reference points in the first period and how households' perception of their income uncertainty change affect saving decisions in the second period and between the periods were examined with estimates of future income change. Saving decisions were tested based on relative gain and loss utility using loss aversion theory of consumption and a two period model. Possible asymmetric saving responses between positive and negative changes in reference dependent income and uncertainty were also analyzed. The 2007 and 2009 Survey of Consumer Finances (SCF) panel dataset was used. Both total and subsamples were analyzed based on the expected income change measure to identify possible asymmetry of saving in response to a set of reference dependent income and uncertainty variables, such as deviation from normal income, expected income change, and income uncertainty change, as well as the effect on saving measured in two ways, savings between 2007 and 2009 and whether or not saved in 2009. This study found a set of reference dependent income and uncertainty variables had significant effects on saving decisions of households and asymmetric saving responses between negative and positive changes in those variables. H (open full item for complete abstract)

Committee: Kathryn Stafford (Advisor); Sherman Hanna (Committee Member); Robert Scharff (Committee Member) Subjects: Home Economics

Doctor of Philosophy, The Ohio State University, 2014, Human Ecology: Family Resource Management

This dissertation provides insights into the impact of the Great Recession upon the retirement decisions of U.S. households. The expected retirement age is used as a proxy for an individual's retirement decision. In the face of the Great Recession, U.S. workers would have three options to adjust the timing of their retirement; delay retirement, retire earlier or retire at the same expected retirement age. Based on the 2007-2009 Survey of Consumer Finances (SCF) panel dataset, the analytic sample is restricted to currently working households whose heads were aged from 30 to 60 in the first survey wave. More than three-fourths of households changed their retirement expectations during the survey period; in 2009, 38% of households responded that they expected to retire earlier age by comparison to their responses in 2007, while 37% of households in 2009 responded that they expected retire at a later age than the age they had given in 2007. Only 25% gave the same anticipated retirement ages in both years. This study utilizes difference-in-differences (DID) model to analyze factors related to changes in the expected retirement age before and after the Great Recession. The Difference-in-Difference ordinary least squares (OLS) regression results indicated that the constructed financial wealth shock had a negative influence on changes in expected retirement age, implying that the increase in financial wealth shock during the recession is correlated with a delayed expected retirement age. However, the average impact of financial shock on the retirement expectations of most working households was very small. Based on the unweighted OLS regression, households that were in the 25th percentile of the effect of the wealth shock (greater shock than 75% of the households) had an increase in expected retirement age of only about 0.17 years, while those in the 10th percentile had a predicted increase of 0.41 years. The weighted OLS results indicated that a household with a (open full item for complete abstract)

Committee: Sherman Hanna (Committee Chair); Robert Scharff (Committee Member); Tansel Yilmazer (Committee Member) Subjects: Families and Family Life; Home Economics

Master of Science, The Ohio State University, 2012, Human Ecology: Family Resource Management

Asset building has been proposed as a critical strategy to assist low-income households in exiting the cycle of poverty. With recent budget cuts at the federal level, the future of programs such as Individual Development Accounts is uncertain. As a result, this study was interested in exploring saving behavior among low-income households. Specifically, this research sought to understand these households by (1) determining asset difference between saving and non-saving households, (2) exploring factors related to saving behavior, and (3) identifying the effects of using different measures of saving. Through the application of the institutional theory of saving behavior, a framework is established for understanding determinants of savings among low-income households. Multiple survey years from the Survey of Consumer Finances were used to investigate the research questions through the use of means testing and logistic regression. Two different savings measurements were used: a broad measure and a narrow measure. The results indicate that saving households have greater levels of net worth, financial assets, and non-financial assets than non-saving households. Additionally, the results show that the institutional theory of saving has substantial explanatory power in understanding low-income saving behavior. Factors that significantly increase the likelihood of saving include owning a bank account, greater net worth, greater income, having a reason to save, having an employer-sponsored retirement plan, and having access to resources through family or friends. Factors that were associated with significantly lower likelihoods include being rejected or discouraged from a credit application, respondents of older ages, and responding in more recent survey years. Differences in significance, magnitude, and even direction of effects were observed between to the two measures of savings that were used. As a result, this study highlights the importance of the definition and measur (open full item for complete abstract)

Committee: Sherman D. Hanna PhD (Advisor); Jonathan J. Fox PhD (Committee Member); Catherine P. Montalto PhD (Committee Member) Subjects: Home Economics

Doctor of Philosophy, The Ohio State University, 2012, Human Ecology: Family Resource Management

In this dissertation, I aim to clarify the factors affecting a consumers' choice between the Internet and a financial planner for making saving and investment decisions, based on household production theory. Moreover, I explore the likelihood of an individual being an Internet user (vs. a non-user), a financial planner user (vs. a non-user), a mixed user (vs. a non-user), an Internet user (vs. a mixed user) or a financial planner user (vs. a mixed user). First, using the data from the combined set of 2001, 2004, and 2007 Survey of Consumer Finances (SCF), I investigated the proportion of U.S. households using the Internet, a financial planner, both, or neither. I found that Internet usage for making saving and investment decisions grew from 12% in 2001 to 20% in 2007. In contrast, financial planner usage statistics for the same purpose slightly decreased during the same period, from 18% to 15%. More interestingly, the proportion of mixed users, who use the Internet in addition to a financial planner, increased from 4% to 7%. Extending these results to multivariate analyses, I tested whether or not time constraints, monetary constraints, and human resource constraints affect a consumer's choice between using the Internet and a financial planner. I found that monetary constraints and human resource constraints affected consumer decisions in choosing between the Internet and a financial planner, which supports household production theory. Unlike my hypothesis, however, time constraints (e.g., working hours per week, presence of a young child under the age of 5) did not bear any significant relationship in making a choice between the Internet and a financial planner. Moreover, the effects of time constraints were not found to be significant on the likelihood of being an Internet user, a financial planner user, and a mixed user. Overall, these results suggest that younger consumers with a Bachelor's degree and less financial assets are more likely to use the Internet, in (open full item for complete abstract)

Committee: Jiyeon Son (Advisor); Sherman Hanna PhD (Advisor); Kathryn Stafford PhD (Committee Member); Stephen Cosslett PhD (Committee Member) Subjects: Finance; Marketing; Social Research

Doctor of Philosophy, The Ohio State University, 2009, Family Resource Management

This is a study of the decision to use a financial planner in saving and investing decisions. Satterthwaite's (1979) improvements upon Stigler's (1961) model of the economics of information were used to define the practice of financial planning as a reputation good. The theory of the economics of information was used to model the likelihood of married couple households to prefer the services of a financial planner over other sources of information. In addition to search theory, seminal and current help-seeking articles revealed a need to place significant emphasis on the differences between men and women in their external search efforts for a financial professional. The objective of this study was to examine the predisposition of women to ask for help in financial affairs over men. An unweighted sample of 2,691 married couple households from the 2004 Survey of Consumer Finances was used to obtain the data necessary to achieve this objective. The respondent of the survey was the spouse who was most familiar with the household's finances. Each household was instructed to select the financially most knowledgeable spouse as the respondent for the survey. Within the sample of married couple households and only among those who used a financial planner, a weighted 23% of households had husband respondents who used a planner and 24% of households had wife respondents who used a planner. An initial logit model revealed that compared to male respondents in a married couple household, being a female respondent was positively associated with the likelihood of choosing a financial planner for saving and investment advice; having household income in the 10% and 15% tax bracket in 2004 was negatively associated with using a financial planner compared to households in the 25% bracket; having greater than or equal to $100,000 in financial assets was positively associated with using a financial planner; and being willing to take financial risks was negatively associated with using (open full item for complete abstract)

Committee: Jonathan Fox PhD (Advisor); Sherman Hanna (Committee Member); Catherine Montalto (Committee Member) Subjects: Behaviorial Sciences; Demographics; Economics; Families and Family Life; Finance; Gender; Home Economics; Womens Studies

Doctor of Philosophy, The Ohio State University, 2009, Family Resource Management

This study proposes to gain insight into which key factors influence household debt repayment; whether these key factors differ across racial/ethnic groups; and whether these factors result in racial/ethnic variance. In particular, this study aims first to: (1) account for household characteristics related to repayment delinquency, (2) examine whether race and ethnicity are related to debt payment problems, even controlling financial events that might cause a decrease or disruption in the flow of periodic household income, financial buffers available in emergency and any other demographic variable and (3) examine how the effects of key factors differ across race and ethnicity. This study analyzes factors related to getting behind or missing payments on household debt by two months or more using the 1992 to 2007 Survey of Consumer Finances. This study defines payment delinquency according to two SCF questions asking (1) whether payments on any loans were sometimes late or missed, and (2) whether the respondent was ever behind in his or her payments by two or more months. Following this, this study will investigate reasons the propensity toward payment delinquency on household debt might differ by race and ethnicity. Finally, this study aims to address the sample selection bias that can affect predictors of delinquency risk in a given population of applicants. Therefore, this study tests for whether the coefficient of the selection effect is significantly different from zero. Finally, the results of this study have implications for financial education programs targeted at different racial/ethnic groups. A logit selection model is used, with the first stage being whether the household had any debt, and the second stage being whether payments on any of the debt were made late or missed by two months or more. This study tests the effect of consumers' financially adverse events, financial buffers and household debt burden on household debt repayment delinquencies. This s (open full item for complete abstract)

Committee: Sherman Hanna Dr. (Committee Chair); Jinkook Lee Dr. (Committee Member); Lucia Dunn Dr. (Committee Member) Subjects: Economics; Families and Family Life; Finance

Doctor of Philosophy, The Ohio State University, 2005, Family Resource Management

The behavior of simultaneously holding liquid assets and credit card debt looks puzzling because the cost of borrowing is higher than the return of saving. A review of the modern models of saving and consumption introducing uncertainty and liquidity constraints into the process of utility maximization suggests that a precautionary saving model may explain the saving behavior of credit card revolvers. The main purpose of this dissertation was to explore the credit card revolver's behavior of holding substantial levels of liquid assets. This research includes two stages. In the first stage, factors associated with the likelihood of being financially sufficient revolvers are investigated. Results from this step support precautionary saving motives as explanations for the behavior of simultaneously saving and borrowing. Therefore, based on a precautionary saving model, the second stage further explores how factors related to uncertainty and liquidity constraints affect the level of liquid assets held by credit card revolvers. In addition, an objective precautionary saving model is compared with a subjective precautionary saving model. The data used for the analyses were obtained from the 2001 Survey of Consumer Finances. A logistic regression is used to estimate the likelihood of being financially sufficient revolvers, compared to being financially sufficient convenience users. An OLS regression is used to study the relationship between precautionary saving and factors measuring uncertainty and liquidity constraints. In addition, an OLS regression with subjective precautionary saving as the dependent variable is examined. Empirical results show that having precautionary saving motives not only increases the likelihood of being financially sufficient revolvers, but also increases the level of liquid assets. This research suggests that revolvers save for precautionary purposes, though this may not be an optimal financial management decision. This study shows that expendit (open full item for complete abstract)

Committee: Catherine Montalto (Advisor) Subjects:

Bachelor of Science in Business, Miami University, 2008, School of Business Administration - Finance

I examine the relationship between key demographic and financial characteristics of single men and women and their respective credit card balances. I examine these relationships using data from the United States Federal Reserve Board Survey of Consumer Finances on the finances of 3,511 men and women. Controlling for several factors, I find that age, race, education, and net worth, but not risk tolerance, have a significant impact on the ratio of credit card balances to income for women. Alternatively, risk tolerance, education, and net worth, but not age or race, have a significant impact on the ratio of credit card balances to income for men.

Committee: Yvette Harman PhD (Committee Co-Chair); Kelly Brunarski PhD (Committee Co-Chair); Janice Taylor (Committee Member) Subjects: Finance