how different cultures approach investing
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How Different Cultures Approach Investing. Tahira K. Hira – Iowa State University Caezilia Loibl – Ohio State University Tom Schenk Jr. – Iowa State University. Objectives. Analyze characteristics of high net-worth households by racial/ethnic groups - PowerPoint PPT PresentationTRANSCRIPT
June 23, 2007
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Tahira Hira
Departments of Human Development and Family Studies
American Association of Family and Consumer Sciences
How Different Cultures Approach Investing
Tahira K. Hira – Iowa State University Caezilia Loibl – Ohio State University Tom Schenk Jr. – Iowa State University
June 23, 2007
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Departments of Human Development and Family StudiesTahira Hira
American Association of Family and Consumer Sciences
Objectives• Analyze characteristics of high net-worth households by racial/ethnic groups
• Explore patterns of financial socialization
• Determine primary investment decision makers
• Identify Adult Learning Preferences & Investment Information Sources
June 23, 2007
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Departments of Human Development and Family StudiesTahira Hira
American Association of Family and Consumer Sciences
Background• Financial Socialization
– Parental Involvement– Financial role-models
• Financial decision makers– Sole decision– Joint decisions with spouse or others
• Learning Preferences– Investment sources– Learning Preferences
June 23, 2007
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Departments of Human Development and Family StudiesTahira Hira
American Association of Family and Consumer Sciences
Procedures• Households with annual incomes greater than $75,000.
• Identified four racial and ethnic groups:– Whites, Blacks, Asian/Pacific Islanders, Hispanics.
• 911 Telephone interviews between 10/05 and 2/06.– National Stratified Random Sample– Average interview time: 22 minutes.
June 23, 2007
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Departments of Human Development and Family StudiesTahira Hira
American Association of Family and Consumer Sciences
Demographics: Race & Ethnicity
June 23, 2007
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Departments of Human Development and Family StudiesTahira Hira
American Association of Family and Consumer Sciences
Demographics: Gender
June 23, 2007
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Departments of Human Development and Family StudiesTahira Hira
American Association of Family and Consumer Sciences
Demographics: Married
June 23, 2007
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Departments of Human Development and Family StudiesTahira Hira
American Association of Family and Consumer Sciences
Demographics: Household Size
June 23, 2007
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Departments of Human Development and Family StudiesTahira Hira
American Association of Family and Consumer Sciences
Finances: Debts, Assets, Debt Ratio
June 23, 2007
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Departments of Human Development and Family StudiesTahira Hira
American Association of Family and Consumer Sciences
Financial Socialization• Similar findings among ethnic groups:
– Lack of parental discussion of money– Strong recollection of parental concern over money.
– School teachers have minimal impact.– Strong parental influence on financial knowledge.
• Exception:– Asian parents were most likely to discuss the importance of savings.
June 23, 2007
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Departments of Human Development and Family StudiesTahira Hira
American Association of Family and Consumer Sciences
Perceived Childhood Financial Security
Percentage RespondingPerceived Financial
Security White Black Asian Hispanic
1 (Not At All Secure)* 4.00% 9.86% 0.00% 5.80%2* 12.57% 14.08% 25.71% 15.94%3** 22.29% 29.58% 20.00% 34.78%4*** 33.14% 28.17% 28.57% 36.23%5 (Very Secure) 28.00% 18.31% 25.71% 7.25% *indicates 99% confidence** indicates 95% confidence*** indicates 90% confidence
June 23, 2007
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Departments of Human Development and Family StudiesTahira Hira
American Association of Family and Consumer Sciences
Making Financial Decisions
Percentage Responding “Often” or “Very Often”
Decision Maker White Black AsianHispani
c
You, by yourself 27.43% 30.56% 34.29% 23.19%Spouse alone 1.43% 2.78% 1.43% 4.35%You and Spouse* 56.29% 56.94% 60.00% 60.87%You with others*** 6.00% 4.17% 1.43% 4.35%Spouse with others*** 0.29% 0.00% 0.00% 1.45%Another Way*** 8.57% 5.56% 2.86% 5.80% *indicates 99%
confidence*** indicates 90%
confidence
June 23, 2007
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Departments of Human Development and Family StudiesTahira Hira
American Association of Family and Consumer Sciences
Investment Information Sources
Information Sources White Black Asian Hispanic
Financial Advisor
31.6% 20.8% 11.4% 17.4%
Internet 21.3% 4.2% 44.3% 14.5%TV Programs 4.0% 1.4% 12.9% 1.5%Radio 3.4% 7.0% 2.9% 1.5%Classes or Workshops
2.6% 8.3% 2.9% 5.8%
Print Media** 23.0% 16.7% 24.3% 20.3%Investment Club***
2.7% 2.8% 2.9% 1.5%
Friends*** 8.1% 13.9% 4.3% 13.1%Workplace*** 10.0% 12.5% 11.4% 7.3%** indicates 95% confidence ***indicates 90% confidence
June 23, 2007
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Departments of Human Development and Family StudiesTahira Hira
American Association of Family and Consumer Sciences
Learning PreferencesPercentage Who Responded "Agree" or ”Strongly Agree"
Learning Preferences White Black Asian HispanicEnjoy learning things** 85.0% 90.3% 91.4% 92.8%Seminars are useful 51.8% 80.3% 73.9% 68.2%Prefer discussing one-
on-one**86.4% 95.8% 88.6% 84.1%
Not interested in learning*
12.3% 11.1% 8.6% 13.0%
Prefer Self Research* 72.1% 80.6% 88.6% 78.3%Want to know details 71.7% 84.7% 85.7% 87.0% * indicates 99%
confidence** indicates 95%
confidence
June 23, 2007
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Departments of Human Development and Family StudiesTahira Hira
American Association of Family and Consumer Sciences
Summary - similarities• Little perceived influence from parents and teachers.
• Respondents perceived financial insecurity as children.
• Joint (with Spouse) investment decisions.
• Strong desire to learn.• Less likely to use radio, classes, and investment clubs.
June 23, 2007
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Departments of Human Development and Family StudiesTahira Hira
American Association of Family and Consumer Sciences
Summary - differences• Asians were more likely to feel financially insecure as children.
• Asians less likely to use financial advisors, more internet/TV users.
• Whites are less likely to find seminars helpful and less detail oriented.
June 23, 2007
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Departments of Human Development and Family StudiesTahira Hira
American Association of Family and Consumer Sciences
Implications• Individuals:
– Discuss money management with children.• Financial Professionals:
– Minorities under-utilizing financial advisors
– Discount brokers• Educators:
– Adults are typically willing to learn.– High-tech media is not being employed.
June 23, 2007
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Departments of Human Development and Family StudiesTahira Hira
American Association of Family and Consumer Sciences
Future Directions• Determine causal relationships• Longitudinal study• Enlarge sample size• Cohort Analysis