The impact of self-efficacy on wealth accumulation and portfolio choice Academic Article uri icon

abstract

  • Self-efficacy is a psychological construct based on the evaluations of one's ability to accomplish certain behaviors or achieve certain outcomes (Bandura, 1977). Although self-efficacy has been linked to health, task accomplishment, greater socio-economic status and income (Seeman and Seeman, 1983; Stretcher et al., 1986; Gecas and Seff, 1990; Judge et al., 2002; Zagorsky, 2007), there has been no study that investigates whether self-efficacy is also a predictor of greater wealth creation over a specific period of time. Applying a theoretical framework based on self-efficacy, this article investigates household financial behaviors using the National Longitudinal Survey of Youth (NLSY79) data-set. For the purpose of this study, change in wealth across time and financial market participation is modeled as a function of socio-economic and demographic variables drawn from prior literature. Findings from this research reveal that self-efficacy is indeed a predictor of investment for financial assets and is also a predictor of wealth creation across time. 2011 Taylor & Francis.

published proceedings

  • Applied Economics Letters

author list (cited authors)

  • Chatterjee, S., Finke, M., & Harness, N.

publication date

  • January 1, 2011 11:11 AM