Present bias and its influence on financial behaviours amongst Indians
Purpose – Present bias (PB) is a cognitive bias that stimulates the individual decision-maker to favour the present reward even over the higher reward in the future to avoid the uncertainty attached to the reward in an uncertain future. The article attempts to examine the prevalence of PB amongst In...
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Emerald Publishing
2025-01-01
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| Series: | IIM Ranchi Journal of Management Studies |
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| Online Access: | https://www.emerald.com/insight/content/doi/10.1108/IRJMS-02-2024-0009/full/pdf |
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| author | Sumit Kumar Maji Sourav Prasad |
| author_facet | Sumit Kumar Maji Sourav Prasad |
| author_sort | Sumit Kumar Maji |
| collection | DOAJ |
| description | Purpose – Present bias (PB) is a cognitive bias that stimulates the individual decision-maker to favour the present reward even over the higher reward in the future to avoid the uncertainty attached to the reward in an uncertain future. The article attempts to examine the prevalence of PB amongst Indians and the effect of such bias on savings and borrowings. Design/methodology/approach – Secondary data on 47,132 respondents from the Financial Inclusion Insights, 2017 database was used in the study. The theory of self-control, which is captured by the widely accepted hyperbolic discounting model, was used to explore the presence of PB. Suitable statistical techniques and the binary probit regression model were employed to attain the objectives of the study. Findings – The prevalence of PB was found amongst 8.2% of the sample respondents. The outcome of the study endorses the view of previous researchers that present-biased people tend to save less and borrow more. Originality/value – Although the exploration of the role of various cognitive biases on financial behaviour is gaining momentum in recent times, there is a dearth of studies exploring the prevalence of PB and its implication towards financial behaviour, especially in the context of the emerging economy of India. The study makes an original contribution in this regard by using a very rich dataset of 47,132 individuals in the Indian context for the first time. |
| format | Article |
| id | doaj-art-7eca56d5c7c444c6855d16f214885754 |
| institution | Kabale University |
| issn | 2754-0138 2754-0146 |
| language | English |
| publishDate | 2025-01-01 |
| publisher | Emerald Publishing |
| record_format | Article |
| series | IIM Ranchi Journal of Management Studies |
| spelling | doaj-art-7eca56d5c7c444c6855d16f2148857542025-01-28T16:14:52ZengEmerald PublishingIIM Ranchi Journal of Management Studies2754-01382754-01462025-01-0141173010.1108/IRJMS-02-2024-0009Present bias and its influence on financial behaviours amongst IndiansSumit Kumar Maji0Sourav Prasad1Department of Commerce, The University of Burdwan, Burdwan, IndiaIIM Bodh Gaya, Bodh Gaya, IndiaPurpose – Present bias (PB) is a cognitive bias that stimulates the individual decision-maker to favour the present reward even over the higher reward in the future to avoid the uncertainty attached to the reward in an uncertain future. The article attempts to examine the prevalence of PB amongst Indians and the effect of such bias on savings and borrowings. Design/methodology/approach – Secondary data on 47,132 respondents from the Financial Inclusion Insights, 2017 database was used in the study. The theory of self-control, which is captured by the widely accepted hyperbolic discounting model, was used to explore the presence of PB. Suitable statistical techniques and the binary probit regression model were employed to attain the objectives of the study. Findings – The prevalence of PB was found amongst 8.2% of the sample respondents. The outcome of the study endorses the view of previous researchers that present-biased people tend to save less and borrow more. Originality/value – Although the exploration of the role of various cognitive biases on financial behaviour is gaining momentum in recent times, there is a dearth of studies exploring the prevalence of PB and its implication towards financial behaviour, especially in the context of the emerging economy of India. The study makes an original contribution in this regard by using a very rich dataset of 47,132 individuals in the Indian context for the first time.https://www.emerald.com/insight/content/doi/10.1108/IRJMS-02-2024-0009/full/pdfPresent biasCognitive biasFinancial behaviourSavingsBorrowing |
| spellingShingle | Sumit Kumar Maji Sourav Prasad Present bias and its influence on financial behaviours amongst Indians IIM Ranchi Journal of Management Studies Present bias Cognitive bias Financial behaviour Savings Borrowing |
| title | Present bias and its influence on financial behaviours amongst Indians |
| title_full | Present bias and its influence on financial behaviours amongst Indians |
| title_fullStr | Present bias and its influence on financial behaviours amongst Indians |
| title_full_unstemmed | Present bias and its influence on financial behaviours amongst Indians |
| title_short | Present bias and its influence on financial behaviours amongst Indians |
| title_sort | present bias and its influence on financial behaviours amongst indians |
| topic | Present bias Cognitive bias Financial behaviour Savings Borrowing |
| url | https://www.emerald.com/insight/content/doi/10.1108/IRJMS-02-2024-0009/full/pdf |
| work_keys_str_mv | AT sumitkumarmaji presentbiasanditsinfluenceonfinancialbehavioursamongstindians AT souravprasad presentbiasanditsinfluenceonfinancialbehavioursamongstindians |