Do Religious Reminders Help You With Your Financial Decisions?

Do Religious Reminders Help You With Your Financial Decisions?

Orhan Erdem, Amy Martin
Copyright: © 2020 |Pages: 12
DOI: 10.4018/IJABE.2020070103
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Although religion is shown to be associated with several prosocial behaviors, not much work has been done on the relationship with economic or financial decision-making. This study aims to fill this gap. Surveying 87 undergraduate students under controlled laboratory conditions, the authors analyzed the effect of subtle reminders of religious concepts on time preferences in relation to finances. The results of the experiments showed that reminding participants of religious themes decreased the percentage of present bias by 10.4%.
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Literature Review

Mischel, Shoda and Rodriguez (1989), demonstrated that people who delayed gratification longer as a child were academically more successful and socially more competent as grown adult individuals. Would that argument be valid in economic settings? Economists measure self-control mostly by means of present bias, which can be defined as not being able to resist instant gratification over a future and larger reward. As Direr (2020) mentions, the term “present-bias” has been used to refer several seemingly similar behavioral biases such as impatience, procrastination, self-control problems, etc. Therefore, a need for its exact characterization, which could differentiate it from these terms, has emerged. This gap has been filled by recent studies (Chakraborty, 2019; Direr, 2020). Our model, which is mainly based on Laibson (1997) model, satisfies Direr’s (2020) characterization.

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