A Methodology of Discovering Comparable Models. The Case of Investing in Retirement Accounts when Considering Age, Main Residence and Education before 1989 vs. Globalization

Daniel Homocianu

Abstract


This paper provides a way to discover strong individual influences on investments in retirement accounts. Data are from SHARE-ERIC (Wave7). Principal residences in ex-communist countries or not and full-time education before 1989 served as filters. Two particular models with good classification accuracy resulted based on data mining, variable selection methods, and logistic regressions. A statistical script generated tables with comparable coefficients (average marginal effects). Common influences from the same financial category as the outcome emerged (having life insurance or ever investing in mutual funds or stocks). The younger respondents, those with computer skills or exposed to high stress, are more likely to invest in retirement accounts regardless of the presence of the communist heritage. Specific influences (personality traits and life experiences) also resulted despite the increasing globalization, which, in the case of people over a certain age, was not able to erase some behavioral differences reflected until today.


Keywords


investing in retirement accounts; ex-communist vs. non ex-communist countries; data mining; binary logistic regressions with average marginal effects; statistical script for generating models’ tables.

JEL Codes


B23; C58; C8; D14.

Full Text:

PDF

References


Acuña, E., and Rodriguez, C., 2004. The Treatment of missing values and its effect on classifier accuracy. In D. Banks, F. R. McMorris, P. Arabie and W. Gaul (Eds.), Classification, Clustering, and data mining applications. Studies in classification, Data Analysis, and Knowledge Organisation (pp. 639 - 647). Berlin: Springer.

Alesina, A., and Fuchs-Schundeln, N., 2007. Good bye Lenin (or not?). The effect of communism on people's preferences. The American Economic Review, 97(4), 1507-1528. http://dx.doi.org/10.1257/aer.97.4.1507

Bastian, J., 1998. The political economy of transition in Central and Eastern Europe. The light(s) at the end of the tunnel. London: Routledge.

Brunello, G., Crivellaro, E., and Rocco, L., 2012. Lost in transition? The returns to education acquired under communism in the first decade of the new millennium. Economics of Transition, 20(4), 637-676. http://dx.doi.org/10.1111/j.1468-0351.2012.00442.x

Burman, L., Cordes, J., and Ozanne, L., 1990. IRAS and national savings. National Tax Journal, 43(3), 259-283.

De Bortoli, D., da Costa, N., Goulart, M., and Campara, J., 2019. Personality traits and investor profile analysis: A behavioral finance study. PLoS One, 14(3), e0214062. http://dx.doi.org/10.1371/journal.pone.0214062

Downing, R., 2016. Christian involvement in sustainable development goals. Christian Journal for Global Health, 3(1), 73. http://dx.doi.org/10.15566/cjgh.v3i1.105

Dziak, J. J., Coffman, D. L., Lanza, S. T., Li, R., and Jermiin, L. S., 2020. Sensitivity and specificity of information criteria. Briefings in Bioinformatics, 21(2), 553-565. http://dx.doi.org/10.1093/bib/bbz016

Falck, O., Gold, R., and Heblich, S., 2017. Lifting the Iron Curtain: School-age education and entrepreneurial intentions. Journal of Economic Geography, 17(5), 1111-1148. http://dx.doi.org/10.1093/jeg/lbw026

Fedorova, E., and Saleem, K., 2010. Volatility spillovers between stock and currency markets: Evidence from Emerging Eastern Europe. Finance a uver - Czech. Journal of Economics and Finance, 60(6), 519-533.

Flanagan, R. J., 1998. Were communists good human capitalists? The case of the Czech Republic. Labour Economics, 5(3), 295-312. http://dx.doi.org/10.1016/S0927-5371(97)00029-8

Ford, D. R., 2017. Studying like a communist: Affect, the party, and the educational limits to capitalism. Educational Philosophy and Theory, 49(5), 452-461. http://dx.doi.org/10.1080/00131857.2016.1237347

Fuchs-Schundeln, N., and Masella, P., 2016. Long lasting effects of socialist education. The Review of Economics and Statistics, 98(3), 428-441. http://dx.doi.org/10.1162/REST_a_00583

Gomes, F., and Michaelides, A., 2005. Optimal life-cycle asset allocation: Understanding the empirical evidence. The Journal of Finance, 60(2), 869-904. http://dx.doi.org/10.1111/j.1540-6261.2005.00749.x

Jimenez-Valverde, A., 2012. Insights into the area under the receiver operating characteristic curve (AUC) as a discrimination measure in species distribution modelling. Global Ecology and Biogeography, 21(4), 498-507. http://dx.doi.org/10.1111/j.1466-8238.2011.00683.x

Johnson, S., Kaufmann, D., Shleifer, A., Goldman, M. I., and Weitzman, M. L., 1997. The unofficial economy in transition. Brookings Papers on Economic Activity, 1997(2), 159-239. http://dx.doi.org/10.2307/2534688

Keloharju, M., Knupfer, S., and Rantapuska, E., 2012. Mutual fund and share ownership in Finland. Finnish Journal of Business Economics, 61(2), 178-198.

Kitao, S., 2015. Pension reform and individual retirement accounts in Japan. Journal of the Japanese and International Economies, 38(C), 111-126. http://dx.doi.org/10.1016/j.jjie.2015.06.002

Korniotis, G. M., and Kumar, A., 2011. Do older investors make better investment decisions? The Review of Economics and Statistics, 93(1), 244-265. http://dx.doi.org/10.1162/REST_a_00053

Laudenbach, C., Malmendier, U., and Niessen-Ruenzi, A., 2019. Emotional tagging and belief formation: The long-lasting effects of experiencing communism. AEA Papers and Proceedings. American Economic Association, 109, 567-571. http://dx.doi.org/10.1257/pandp.20191051

Laudenbach, C., Malmendier, U., and Niessen-Ruenzi, A., 2020. The long-lasting effects of living under communism on attitudes towards financial markets. NBER Working Paper Series, 26818. http://dx.doi.org/10.3386/w26818

Leff, N. H., 1969. Dependency rates and savings rates. The American Economic Review, 59(5), 886-896.

Lin, M., Lucas, H. C., and Shmueli, G., 2013. Too big to fail: Large samples and the p-value problem. Information Systems Research, 24(4), 906-917. http://dx.doi.org/10.1287/isre.2013.0480

Love, J., 1986. Max Weber and the theory of ancient capitalism. History and Theory, 25(2), 152-172. http://dx.doi.org/10.2307/2505303

Malmendier, U., and Nagel, S., 2011. Depression babies: Do macroeconomic experiences affect risk taking? The Quarterly Journal of Economics, 126(1), 373-416. http://dx.doi.org/10.1093/qje/qjq004

Miles, J., 2005. R-Squared, adjusted R-squared. In B. S. Everitt and D. Howell (Eds.), Encyclopedia of Statistics in Behavioral Science (eds. 2005 ed.). New York: Wiley.

Mukaka, M. M., 2012. Statistics corner: A guide to appropriate use of correlation coefficient in medical research. Malawi Medical Journal, 24(3), 69-71.

Olsen, R., 2012. Trust: The underappreciated investment risk attribute. Journal of Behavioral Finance, 13(4), 308-313. http://dx.doi.org/10.1080/15427560.2012.735728

Pertiwi, T., Yuniningsih, Y., and Anwar, M., 2019. The biased factors of investor's behavior in stock exchange trading. Management Science Letters, 9(6), 835-842. http://dx.doi.org/10.5267/j.msl.2019.3.005

Sahadev, S., and Demirbag, M., 2010. A comparative analysis of employment practices among post-communist and capitalist countries in South Eastern Europe. Employee Relations, 32(3), 248-261. http://dx.doi.org/10.1108/01425451011038780

Salmeron, R., Garcia, C. B., and Garcia, J., 2018. Variance Inflation Factor and condition number in multiple linear regression. Journal of Statistical Computation and Simulation, 88(12), 2365-2384. http://dx.doi.org/10.1080/00949655.2018.1463376

Sparkes, R., 2008. Ethical investment: Whose ethics, which investment? Business Ethics (Oxford, England), 10(3), 194-205. http://dx.doi.org/10.1111/1467-8608.00233

Tekce, B., Yilmaz, N., and Bildik, R., 2016. What factors affect behavioral biases? Evidence from Turkish individual stock investors. Research in International Business and Finance, 37(C), 515-526. http://dx.doi.org/10.1016/j.ribaf.2015.11.017

Tibshirani, R., 2011. Regression shrinkage and selection via the lasso: A retrospective. Journal of the Royal Statistical Society. Series B, Statistical Methodology, 73(3), 273-282. http://dx.doi.org/10.1111/j.1467-9868.2011.00771.x

Weber, M., 2005. The protestant ethic and the spirit of capitalism. London: Taylor & Francis. http://dx.doi.org/10.4324/9780203995808

Zamani, H., Shekari, M., and Pakdaman, Z., 2020. Modeling insurance data using generalized gamma regression. Journal of Statistical Modelling: Theory and Applications. http://jsm.yazd.ac.ir/article_1733_7149c1055ca1f3d5c813c80d60e8c545.pdf




DOI: http://dx.doi.org/10.47743/saeb-2020-0026

Refbacks

  • There are currently no refbacks.