The third column shows the results after inclusion of the second behavioural variable
capturing people who are organised with their money. These people are 7 per cent less
likely than disorganised individuals to experience financial distress. Again, the significance
and interpretation of the remaining variables in the regression does not change from the
results reported in the first and second columns.6
Column 4 shows the results when a measure of time preference is included in the regres-
sion. People who claim that they tend to live for today and let tomorrow take care of itself
are 10 per cent more likely to experience financial distress than those who have a preference
for the future. Impulsive people are still more likely than non-impulsive people to get into
financial trouble, while organised individuals are less likely than disorganised individuals
to experience financial distress. The inclusion of all three behavioural dummy variables
raises the pseudo-R2 from 0.104 to 0.128, suggesting that behavioural characteristics play
an important role in predicting financial problems.
One interesting pattern that emerges from Columns 2 to 4 (and which emerges from
other regressions not reported here) is the relative stability of the coefficients on the indi-
vidual behavioural variables. One might have expected that these variables could be highly
correlated, perhaps all proxying for some common behavioural trait such as “common
sense.” In that case, one might have expected the coefficients on the individual behavioural
characteristics to move around a lot and for there to have been limited additional explana-
tory power when new behavioural variables were added. In fact, each of these variables
adds to the fit of the model and the relative sizes of the individual coefficients are relatively
stable.
Irish Results: The results in Columns 1 to 4 are based on the pooled Irish and UK
samples. However, since the UK sample accounts for almost 80 per cent of the entire
sample, I also report the results based on the Irish sample only. The results, which are
reported in column 5 of Table 7, are broadly similar to those for the entire sample. In
6 The variable capturing people who are organised with their money is a triple interaction variable incor-
porating information on whether or not respondents agree with the statement on money organisation, if they
know how much money is available to them or how much money they owe and if they ever check account
statements or monitor their investments. The regression in re-run several times replacing the organisation
variable with each of its individual elements. The results suggest that the two most important elements are
whether or not the respondent agrees with the statement on money organisation and whether or not they
check statements and monitor their investments.
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