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3.2 Variables

The dependent variable is the participants' allocation choices, either the asset (H1) or portfolio (H2), tested with the eye tracker and self-report (pen and paper using a questionnaire with the allocation scenarios). H1 and H2 were first assessed by the eye tracker, then the self-report. The independent variable is the participant's chronic regulatory focus. Table 3.1, as below, indicates the variables involved, their nature (dependent/independent) and means of measurement.

The data that results from the self-report may be distorted due to the human tendency to present oneself in the best possible light (Fisher 1993). The subsequent findings may be systematically biased toward respondents' perceptions of what is 'right' or socially acceptable (Maccoby and Maccoby 1954). This phenomenon is known as social desirability bias, and is pervasive across all fields (Levy 1981; Peltier and Walsh 1990). Social desirability bias can lead to common method variance,[1] which can be a potential problem in behavioural research (Podsakoff et al. 2003). Especially in the selection of assets and portfolios, participants may feel the need to choose assets that are socially acceptable for their demographic, e.g. wealthier participants may feel the need to select risky assets (Waneryd 2001). This may cause spurious results or conceal the relationship between variables in the study (Ganster et al. 1983). Most methods that propose to deal with social desir- ability bias involve surveys with multiple items (Nederhof 1985), irrelevant to the allocation choices in this book. Podsakoff et al. (2003) proposed that the variables could be collected from different sources to remedy the issue of social desirability bias. Thus, the eye tracker was used to provide the behavioural data regarding allocation choice, to complement the self-report. The eye tracker is an objective measure (Duchowski 2007), which when used in tandem with the self-report, will limit the possibility of the mind-set of participants to bias the relationship between

the dependent and independent variables (Podsakoff et al. 2003). The use of two measures to test the hypotheses may cause loss of information if data on the independent and dependent variables are not linked (Podsakoff et al. 2003), but care was taken in the research to prevent such occurrences. Moreover, the eye tracker allows the researcher to 'step into another's shoes' and collect data from the user's point of view. This allows the researcher to obtain objective information about consumer behaviours, from the consumer's perspective (Starr and Fernandez 2007).

A Pearson chi-squared test was first conducted to determine association between allocation choice and chronic regulatory focus. Then, to gain further insight, a simple logistic regression was conducted. This model measures the relationship between a categorical dependent variable (allocation choice) and categorical independent variable (chronic regulatory focus) (Bhandari and Joensson 2009). Research has stated that gender, age group, ethnicity (Weber and Hsee 1998), marital status (Grable 2000), education and financial literacy (Rooij et al. 2007) are

Table 3.1 Variable list (Hypotheses)




Allocation choice (asset and portfolio)


Eye tracker and self-report

Chronic regulatory focus


Composite regulatory focus scale

related to financial decision-making. Thus, these demographic variables were used as control variables in the logit model, to test the relative impact of chronic regu- latory focus on allocation choice.

In this book, financial literacy was controlled, by selecting participants who are

known to have the requisite levels of knowledge to understand the situations pre- sented. The participants' level of financial literacy was reconfirmed with a financial literacy test, immediately after the main experiment was conducted. The result of this test was coded as the financial literacy variable in the logistic regression. This variable functions only as a control variable, and further analysis into financial literacy will not be conducted. Section 3.2.3 provides further details regarding financial literacy. The Chronic Regulatory Focus Scale, allocation choices on the self-report and financial literacy questions are on the same questionnaire provided to the participants. The sections that follow elaborate upon the measures are indi- cated in Table 3.1.

  • [1] Common method variance is variance that is attributable to the measurement method rather than the constructs that the measures represent (Podsakoff et al. 2003)
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