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Santi, Sahara, Kamaludin, The Effect of Mental Accounting…
https://doi.org/10.35760/eb.2019.v24i2.1907
THE EFFECT OF MENTAL ACCOUNTING ON STUDENT’S
INVESTMENT DECISIONS: A STUDY AT INVESTMENT
GALLERY (GI) FEB UNIVERSITY OF BENGKULU AND SYARIAH
INVESTMENT GALLERY (GIS) FEB IAIN BENGKULU
1Fitri Santi, 2Nelsi Valetta Sahara, 3Kamaludin
1.2.3 Fakultas Ekonomi dan Bisnis Universitas Bengkulu
1.2.3 Jl. Wr. Supratman, Kandang Limun, Muara Bangka Hulu,Bengkulu
1Fitri_santi@unib.ac.id, 2nelsivaletta23@gmail.com, 3kamaludin@unib.ac.id
Abstrak
Penelitian ini mencoba untuk mengeksplorasi fenomena keberadaan akuntansi mental (MA)
antara investor di Galeri Investasi FEB Universitas Bengkulu dan investor di Galeri Investasi
Syariah FEB IAIN Bengkulu, dan untuk menguji pengaruhnya terhadap keputusan investasi
saham. Kami mengumpulkan data menggunakan kuesioner. Penelitian ini menggunakan analisis
regresi linier sederhana untuk menguji hipotesis. Hasilnya menunjukkan bahwa investor memang
memiliki MA. Rata-rata jawaban responden menunjukkan bahwa mereka memperlakukan uang
bulanan dengan uang bonus berbeda dalam berinvestasi. Ketika menggunakan uang bulanan
sebagai modal, mereka rata-rata menggunakan porsi kecil dari uang bulanan mereka untuk
investasi, tetapi ketika modal adalah uang bonus mereka, maka mereka menggunakan lebih
banyak porsi uang untuk investasi. Bagi responden, uang bulanan mereka jauh lebih penting
daripada uang bonus, dan mereka juga lebih takut terhadap risiko ketika menginvestasikan uang
bulanan daripada ketika menginvestasikan uang bonus, dan ketika ada kerugian, tingkat kerugian
dari menginvestasikan uang bulanan lebih tinggi daripada tingkat kerugian penyesalan dari
menginvestasikan uang bonus. Hasilnya menunjukkan MA ada di antara para investor, dan
memang memiliki pengaruh yang signifikan terhadap keputusan investasi saham.
Kata kunci: Mental accounting (MA), stock investment decision
Abstract
Our study tries to explore the existence of mental accounting (MA) phenomenon among the
investors at Investment Gallery FEB University of Bengkulu and the investors at Sharia
Investment Gallery FEB IAIN Bengkulu, and to test its influences on the stock investment decision.
We collect data using questioner. This study uses simple linear regression analysis to test the
hypothesis. The results show that investors do have the MA. The average respondents' answers
indicate that they treat monthly money with bonus money differently in investing while using
monthly money as the capital, they averagely use a smaller portion of their monthly money for
investment, but when the capital is their bonus money, then they use more portion of the money for
the investment. For the respondents, their monthly money is more important than the bonus
money, and they are also more afraid of the risks of investing the monthly money than investing
the bonus money, and when there is a loss, the regret level of losses from investing monthly money
is higher than regret level of losses from investing bonus money. The result shows the MA exists
among the investors, and have a significant effect on the stock investment decisions.
Keywords: Mental accounting (MA), stock investment decision
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Jurnal Ilmiah Ekonomi Bisnis Volume 24 No. 2 Agustus 2019
INTRODUCTION
Mental accounting (MA) is an
economic concept established by Richard
Thaler, which contends that individuals
divide their current and future assets into
separate, non-transferable portions. It is a
psychological factor that makes individuals
tends to divide their money into certain
categories in their minds. The theory
mentions that individuals assign different
levels of utility to each asset group, which
affects their consumption decisions and
other behaviors. Rather than rationally
perceiving every Rupiah as identical, MA
helps explain why many investors assign
some of their money as safety capital which
they invest in low-risk investments, while
at the same time treating their risk capital
quite differently.
Investments are the activities which
include investing some resources to get
return in the future. Investments are
basically placing some fund today in
expected to get profits in the future. It is
obvious that investors not only consider the
estimate of the prospects of investment
instruments alone in their investment
behavior, but also involve psychological
factors in making their investment
decisions. That is we start to uses the
psychology science and financial science in
the effort to understand the financial
behavior. Behavioral finance as a study of
how psychological phenomena affect the
financial behavior of an individual
(Nofsinger, 2001; H. Shefrin, 2002)
The integration of psychology into
economics and finance literature led
prominent scholars, Daniel Kahneman and
Amos Tversky, create prospect theory in
1979. Prospect theory modeled how
individuals make a choice between
probabilistic alternatives where risk is
involved and the probability of different
outcomes is unknown. It earned Kahneman
the Nobel Prize in Economics in 2002.
Prospect theory is an explanation of human
decision making in a state of uncertainty
outcome. This can be applied to situations
ranging from life decisions such as
changing careers or moving abroad, to
financial options such as choosing an
investment fund or deciding whether to buy
insurance. Prospect theory suggests that
people valued losses and gains differently,
and thus individuals make decisions based
on perceived gains instead of perceived
losses. Also known as "loss-aversion"
theory, the general concept is that if two
choices are put before an individual, both
equal, with one presented in terms of
potential gains and the other in terms of
possible losses, the former option will be
chosen. Prospect theory suggests that
humans are irrational decision makers.
Tversky and Kahneman proposed that
losses cause greater emotional impact on an
individual than does an equivalent amount
of gain, so given choices presented two
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Santi, Sahara, Kamaludin, The Effect of Mental Accounting…
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ways (with both offering the same result) –
an individual will pick the option offering
perceived gains.
Everyone in the world would certainly
be involved in the decision-making process.
This decision-making can take place in any
situation, starting from the simplest to the
most complex ones. Decision-making can
occur in situations where one predicts
future outcomes of the alternatives, and
then chooses one of two or more options,
and estimates the the probability of those
outcomes on the basis of mostly limited
evidence.
When making investment decisions,
standard traditional theory in finance are
relatively dominated by the expected utility
theory. Expected utility theory assumes that
individuals are rational decision makers,
but they are often not rational when they
make their choice (Robison, Shupp, &
Myers, 2010). There are many
psychological factors, such as emotion,
mood, psychological biases, ect that affect
the decision making process. Even
Kahneman and Tversky (1979) developed
Prospect Theory, in which there are factors
such as regret aversion, loss aversion, and
mental accounting that can affect one's
decision making process.
In this study, the factor to be discussed
is mental accounting (MA). Mental
accounting was first created by the
University of Chicago professor, Richard
Thaler. MA describes people’s tendency to
code, categorize, and evaluate economic
outcomes by grouping their assets into any
number of nonfungible
(noninterchangeable) mental accounts in
their mind (R. Thaler, 1980). A very
rational person will never be exposed to this
psychological bias, because mental
accounting will cause a person to take
irrational steps to place money differently
based on certain categories, such as how to
earn money (work, inheritance, gambling,
bonuses, other) or the nature of the use of
the money (recreation, necessities, etc.)
(Pompian, 2006). People may have multiple
mental accounts for the same kind of
resource. A person may use different
monthly budgets for grocery shopping and
dinning out at restaurants, for example, and
constrain one kind of purchase when its
budget has run out while not constraining
the other kind of purchase, even though
both expenditures draw on the same
fungible resource (income) (Cheema &
Soman, 2006). Similarly, supermarket
shoppers spend less money at the market
when paying with cash than with their debit
cards (and credit cards), even though both
cash, debit and credit cards draw on the
same economic resource. Comparing the
price of goods to a smaller mental account
(e.g., the cash in their wallet) than to a
larger mental account (e.g., the money in
their bank accounts) increases the "pain of
payment".
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Jurnal Ilmiah Ekonomi Bisnis Volume 24 No. 2 Agustus 2019
Mental accounting focuses on how a
person responds and evaluates a situation
where there are two or more possible
outcomes. Not only related to financial
problems, mental accounting can also cover
human behavior widely. By understanding
mental accounting, people are expected to
understand the psychological processes
underlying a person in making choices or
making economic and other decisions.
We contribute to the literature by
providing empirical evidence on the
existance of MA and provide the further
evidence on it’s impact on the students
investment decision. We administered
questioners to 100 students as investors at
GI FEB University of Bengkulu and GIS
IAIN Bengkulu. We use descriptive
statistics and simple linear regression to test
the hypotesis. Our result show that the MA
exists amongst students in Bengkulu, and
the MA has a significant effect on
investment decision of students in
Bengkulu.
This paper is presented in the
following sequence: the introduction, the
literature review and hypotheses
development, the reseach method, the
results and discussion, and conclusions.
LITERATURE REVIEW
In this session we will discuss the
assumption of rationality in traditional
finance theory, and the investment decision
and the effects of MA on the investment
decisions.
The Assumption of rationality and
traditional financial theory
Financial theories are generally built
on the basis of various assumptions to
clarify the position of the theory when
faced with the real situation. Assumptions
are needed to enforce a theory to be readily
tested for implementation, and what
happens if those assumptions are violated
(Asri, 2013). Conventional financial theory
has one important assumption that human
beings in making decisions are rational. In
general, it is known that some
characteristics of human rationality, among
others: always thinking before deciding,
have preferences, able to choose the best
viewed alternative among the available
options, willing to pay attention to all
information, and able to evaluate and
compare information. However, a person’s
rational way of thinking has some
limitation or bounded, so it is called
bounded rationality. Bounded rationality is
happened whenever the decision makers are
bounded by the limited ability of their
rationality by a number of limitations or
obstacles when making decision and
making choices.
In facing uncertainty condition,
rational decision can be taken by using the
principle of expected value maximization.
This concept is well known as expected
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utility theory. The expected utility theory
related to choosing decision alternatives
rationally with emphasize that individual
has different behavior toward risk (Asri,
2013). This theory is overly simplifying the
reality, as it argue that a decision making is
merely defined by attitude toward risk.
Investment decision and the effects of
mental accounting bias on investment
decision.
Investments are activities which
involved investing some resources to
certain business in order to get returns or
profit in the future. Investment is placing
some funds today in a business in expecting
to get profit or return in the future. In order
to do investment activity in capital market
properly, an investor needs to have enough
knowledge, skills, and intuition about
business, to analyze which stock to buy or
hold and which stock to be sold. Investor is
supposed to be rational in making stock
purchasing decision. There are several
reasons of why do individuals invest, for
example: they pursue investment activity to
get a better future life, to reduce inflation
risk, to get tax saving benefits. Basically,
people pursue investment activity for the
purpose of gaining or increasing their
wealth.
Bodie, Kane, and Marcus (2006) argue
that there are two important aspects in
investment: the expected return and the
risk. Investment decision is a multi-
dimension construct. It involves at least the
following dimensions: (1) How much
money to be invested, will we invest in
small portion or large portion of our
money? (2) When will we invest? Do we
invest sooner or later? Do we take an
investment whenever we have much
money, or whenever we thought that this is
the best time to invest? (3) Investment
decision involves decisions on what kind or
type of investments will we take. Is it
investment in real assets or financial assets,
short term or long-term assets, or
combination of them? (4) Investment
decision also involves decisions about the
source of fund which will be invested.
Initially, in making an investment
decision, an investor not only uses the
estimates of investment instruments
prospects, but also is influenced by
psychological factors. Investment analysis
which considers both the field of
psychology science and the field of finance
science is known as behavioral finance.
Behavioral finance is a field of study in
finance which explores how individual is
behaving in financial settings. Specifically,
it studies how human psychology affects
individual financial decision making,
corporate decision making, and market
behavior (Nofsinger, 2001; H. Shefrin,
2002). It is also an alternative approach in
studying how psychology aspects affect
individual investment decision making.
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Jurnal Ilmiah Ekonomi Bisnis Volume 24 No. 2 Agustus 2019
In mental accounting concept it is
assumes that individuals divides their
money into some certain accounts based on
its purposes. Thaler (1985) stated that
“mental accounting is the set of cognitive
operation use by individuals and household
to code, catagorize and evaluate financial
activities.” Mental accounting describes
people’s tendency to code, categorize, and
evaluate economics outcomes by grouping
their assets into any number of non-
fungible (non-interchangeable) mental
accounts. As Pompian (2006, p. 171) states:
“A complete rational person would never
succumb to this sort of psychological
process because mental accounting causes
subjects to take the irrational step of
treating various sums of money differently
based on where these sums are mentally
categorized, for example the way that a
certain sum has been obtained (work,
inheritance, gambling, bonus, etc.) or the
nature of the money’s intended use (leisure,
necessities, etc).”
The concept of framing is useful in
mental accounting analysis. Individuals,
due to heuristic thinking process, use
framing to process information. Their
perspectives on money and investment
usually are framed accordingly to the
surrounding circumstances that they face
(H. M. Shefrin & Thaler, 1988). In Shefrin
and Thaler’s behavioral life-cycle theory
(1988), it is states that people mentally
allocate wealth over three classifications:
(1) current income, (2) current assets, and
(3) future income. The propensity to
consume is greatest from the current
income account, while future income is
treated more conservatively.
There are three components in MA.
(1) Individual captures how outcomes are
felt and experienced, and how a decision is
made and evaluated. (2) Mental accounting
involves placing activities into certain
accounts. Both sources and uses of money
should be grouped in some accounts
mentally like an accounting system. (3) The
frequency of account evaluation, which
means each account can be noted or
evaluate daily, monthly, or yearly (R.
Thaler, 1985).
MA is a cognitive bias type, which
refers to the coding, categorization, and
evaluation of financial decisions. It is a
psychological factor which measurement
has several goals. First, being a self-
controlling tool that causes people to think
rationally to make good decisions (R. H.
Thaler & Sunstein, 2008). The second is to
help individual to see the financial
problems better but inefficiently, so there is
a possibility of conflict with both goals, and
consequently in an accurate representation
does not always make a person happy for a
short time (Prelec & Loewenstein,
1998). MA focuses on how a person
responds and evaluates a situation where
there are two or more possible outcomes.
Not only related to financial problems, MA
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can also cover human behavior widely. By
understanding mental accounting, people
are expected to understand the
psychological processes underlying in
making choices or making economic and
other decisions.
Mental accounting can be illustrated as
follows. Suppose we have for example, a
civil servant (PNS) with a monthly salary
and the thirteenth salary. Every civil servant
(PNS) gets a thirteenth salary, a salary
equal to one full monthly salary each year.
For example, a civil servant (PNS) who is
receiving a monthly salary of Rp.3.500.000,
-., she/he usually restrict to use this
monthly salary for some certain purpose,
such as paying electricity bills, buying
foods, paying school fee for their kids, etc.
Sometimes, not a single bit of the salary is
used for other purposes, for example let
alone to have fun. It will be different
whenever the money is come from his/her
thirteenth salary. He/she would spend them
for shopping and leisure. They frame their
money differently, between the monthly
salary and the thirteenth salary, because the
thirteenth salary is a bonus salary, so he can
spend it just like that.
MA can also affect the investment
decision. For example, when someone gets
a monthly salary and a bonus salary, and
then he wants to invest. He would be more
inclined to invest using his bonus money
because he thinks (frames) that he invests
his bonus money, when something goes
wrong with his investment, he does not feel
very bad for that failed investment.
However, it will be different when the
money for investment is from his monthly
salary. Although he loses money in the
same amount but he regrets more, because
they frame and categorize these two type
salaries differently and they place different
weight for each of them. They fail to
consider that money from monthly salary
and bonus salary are interchangeable or
fungible.
There are many previous studies about
mental accounting. Barberis and Huang
(2001) conducted research on mental
accounting, loss aversion, and individual
stock returns. They consider a form of MA
as investors’ concern about return/gains
and risk/losses of individual stock values,
and investors’ concern about return/gains
and risk/losses of the overall portfolio
value. Those investment behaviors show
that investors who suspect to mental
accounting have two possible attitudes.
First, the attitude toward the risk preference
which is either risk seeker, risk averter, or
risk neutral. Second, return preference
where investors have certain preference to
accept return in the form of capital gain, or
dividend. Barberis and Huang (2001) used
framing concept to explain the investor
preference. Framing induce individuals to
develop attitude; whether tend to accept
gains/return in positive frame, or whether
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Jurnal Ilmiah Ekonomi Bisnis Volume 24 No. 2 Agustus 2019
tend to accept losses/risk in negative frame,
or to treat them in balance.
With MA, investors pay attention to
gains and losses (Barberies and Huang,
2001). Implementation of MA by investors
is by using narrow framing. Thus, investors
framing their financial decisions by
expressing attention to gains/returns or
losses/risks and evaluating investment
decisions (outcomes), so the individual
frames a subjective transaction in mind to
determine the utility they receive. This
reflects an attention to the non-consumption
resources of utility, where the natural
experience exceeds narrow framed gains
and losses. Furthermore, investors consider
two forms of MA. First, investors care
about gains and losses in the value of
individual stocks (individual stock
accounting), and secondly, investors care
about gains and losses in the value of all
portfolios, and show that MA forms affect
the price of assets in a significant way.
MA is a bias that can cause a variety
of problem for investors. Pompian (2001)
mention that MA can cause at least five
problems. First, it can cause individual to
think or imagine that their investment
occupy separate “packages,” or accounts.
There categories might include, for
example money from monthly salary,
money from bonus, college fund or money
for retirement. However, envisioning
distinct accounts to correspond with
financial goals can cause investors to
neglect positions that offset or correlate
across accounts. This can lead to sub-
optimal aggregate portfolio performance.
Second, it can cause investors to irrationally
distinguish between returns derived from
income and those from capital appreciation.
Many investors feel the need to preserve
capital sums and prefer to spend interest.
As a result, some investors tend to pursue
income streams and can unwittingly erode
principal (capital sums) in the process.
Third, it can cause investor to allocate
assets differently, especially when
employer stock is involved. Individual in
company retirement plans that offer no
company stock as an option tend to invest
in a balanced way between equities and
fixed-income instruments. However, when
employer stock is an option, individual
(employees) usually allocate a portion of
contributions to company stock, so total
equity allocation then could be too high;
and finally causing these investors portfolio
to be potentially under-diversified. Fourth,
it can cause investor to be trapped in or
failed to resist “house money” effect,
wherein risk-taking behavior escalates as
wealth grows. Investor exposing this
rational behave irrationally because they
fail to treat all money as interchangeable or
fungible. Fifth, it can cause investor to
hesitate to sell investment that once
generated significant gains but, later over
time, have fallen in price. During the bull
market condition investors become
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accustomed to or familiar with healthy,
unrealized gains. But whenever market
started to goes down, they hesitate to sell
their positions. Later; everything becomes
too late, they regret not reaping gains when
they could.
Lim (2004) conducted research on
how mental accounting has impact on
investors’ trading decision by testing
whether investors' trading decisions are
influenced by their preferences for framing
gains and losses. She find that investors are
more likely to bundle sales of losers than
sales of winners on the same day. She
confirm that her findings are consistent
with the Thaler’s hypothesis (1985) that
individuals prefer integrating losses and
segregating gains. In addition, the extent to
which mixed sales of winners and losers are
consistent with the hedonic editing
hypothesis is greater than what would be
expected under random sales of stocks. She
suggest that mental accounting is likely to
play a significant role in investors' trading
decisions.
In Indonesia, there are studies
conducted related to the MA bias. One of
them is a study conducted by Sumtoro and
Anastasia (2015). They examine the effect
of MA on decision making of residential
property investment in Surabaya. They find
that MA does have influence on investor
decision of residential property investment.
However, other factors such as regret
aversion and loss aversion have more
significant influence on residential property
investment decision. The regret aversion
becomes the first consideration and loss
aversion becomes the second consideration
for investors in investing residential
property of house and apartment type in
Surabaya. MA becomes the third
consideration for investors to invest in
residential property such as house and
apartment in Surabaya. Their study show
support for Thaler’s (1985) study which
found that investors tend to consider each
asset that is owned separately rather than
merge with the investment. Furthermore,
MA will affect an investor's investment
decision depending on whether the investor
is concerned about gains and losses in the
value of individual stocks or in the value of
the entire portfolio (Barberis & Huang,
2001).
We will empirically examine the effect
of MA on student’s investment decision.
Initially, there were only two investment
gallery in Bengkulu Province (Investment
gallery of Bengkulu University and Sharia
Investment Gallery of IAIN Bengkulu), but
later other private universities in Bengkulu
Province also start to open investment
galleries for their students and for the
public to learn and to practice investing in
capital market. These two investment
galleries have investors who are mostly
students. From the above discussion, we
develop the following hypothesis:
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Jurnal Ilmiah Ekonomi Bisnis Volume 24 No. 2 Agustus 2019
H1: Mental accounting affects the
stock investment decision of investors at
the Investment Gallery (GI) FEB UNIB and
investors at Sharia Investment Gallery
(GIS) IAIN Bengkulu.
RESEARCH METHOD
Variables and operational definition
The dependent variable of this study is
investment decision (KI), and the
independent variable is mental accounting
(MA). The operational definition of
variables included in this study is presented
in Table 1. We define investment decision
is a decision made by respondent about
investing in stocks at the Galeri Investasi
FEB UNIB and at the Galeri Investasi
Shariah IAIN Bengkulu. Respondents were
asked to respond on the following seven
statements as listed in Table 1.
Table 1 Operational definition of research variables
Variable
Indicators
Scale
Investment
decision
1. I always care about the gains and losses that I
get from my investment in the stock I choose
using my monthly money.
2. I always care about the gains and losses that I
get from my investment in the stock I choose
using my bonus money.
3. I invest in the type of investment that suits to
my income sources type.
5 point - Likert scale:
1 = strongly disagree
2 = disagree
3 = neutral
4 = agree
5 = strongly agree
Mental
Accounting
1. I always allocate my income into several
accounts
2. I always treat my monthly income and
bonuses differently
3. I always calculate the cost to be incurred from
my monthly money
4. I do not always calculate the cost to be
incurred from my bonus money
5 point - Likert scale:
1 = strongly disagree
2 = disagree
3 = neutral
4 = agree
5 = strongly agree
Population and sample
The population of our study are
investors at GI FEB UNIB and GIS IAIN
Bengkulu. The sample of our study are 50
investors at GI FEB UNIB and 50 investors
at GIS IAIN Bengkulu. We distributed
questioner to these 100 investors in
February – March 2017. Sampling
technique in this study is convenience
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sampling. Simple regression analysis is
used to test the hypothesis.
RESULTS AND DISCUSSION
Descriptive statistics
Based on the data obtained from the
Investment Gallery of Bengkulu University,
the students who are registered as investors
are 75 students, with the average investor
coming from the students of semester 4 and
semester 6. The total deposit amount is
Rp.8.450.000,-. While based on data
obtained from IAIN Bengkulu, total
investors are 332 student investors, but only
261 investors are active in trading. The
average investor comes from students of
semester 4 and 6. The total deposit amount
is reaching Rp.303.128.100,- (table2).
Table 2 Respondens profile
Frequency
Persentage
Male
Female
42
58
42%
58%
Age:
17
18
19
>20
-
-
18
82
-
-
18%
82%
Student at semester:
2
4
6
8
-
45
48
7
-
45%
48%
7%
Monthly money:
<Rp 500.000
Rp 500.000
Rp 500.001 -Rp 999.000
Rp 1.000.000-Rp1.500.000
>Rp 1.500.000-
28
3
50
19
-
28%
3%
50%
19%
-
Have been investors for:
Less than 1 month
About 1 month
About 2 month
More than 2 month
22
14
16
48
22%
14%
16%
48%
Portion of monthly money to buy stock:
25 % of monthly money
50 % of monthly money
75 % of monthly money
100% of monthly money
75
14
11
-
75%
14%
11%
-
Table 2 shows that 58 percent of our
respondent is female. Respondents mostly
have aged more than 20 years old (82%).
Respondents are mostly at semesters 4 and
6, only 7% respondents are students of
semester 8. Majority of respondents receive
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Jurnal Ilmiah Ekonomi Bisnis Volume 24 No. 2 Agustus 2019
monthly money of less than Rp 1,000,000.
Regarding the length of time to invest and
how much is invested, many respondents
have invested more than 3 months.
Meanwhile, most respondents invested only
25% of the monthly income in stock.
Table 3 describes the frequency
distribution of respondent response on
seven items statement. The first 4 items are
items for mental accounting variable, and
the rest are items for investment decision
variable. In Table 3, the first items we
obtained the result: 10 respondents gave the
answer of strongly agree, 44 respondents
gave answer agreed, 38 respondents gave
neutral answer, 3 respondents disagreed,
and no respondents answered strongly
disagree. This means more than 50% of
respondents agree on it. The average
obtained is 3.52 and indicating that the
respondent is influenced by mental
accounting.
The second item in Table 3 show that
62 respondents stated strongly agree and
agree about the second statement, 32
respondents answered neutral, while 6
respondents answered disagree. Because
respondents who answered agreed more
than 50%, as well as the average obtained is
3.61, then it indicates that more than half of
respondents are influenced by mental
accounting. Because mental accounting in a
person seems to be his way of treating his
money, one of them by distinguishing
bonus money and monthly money received.
The third items in Table 3 shows that
60 respondent gave response agree, 34
respondent answered neutrally and 6
respondent answered strongly disagree. The
average is 3.57, indicating that most
respondents are influenced by mental
accounting.
The fourth items in Table 3 shows that
86 respondents gave agree response, 12
respondents gave neutral response and 2
respondent gave disagree response. The
average obtained is 4.19 which indicates
that the respondent is influenced by mental
accounting. Indeed when someone instilled
mental accounting in his mind, then he will
feel that the bonus money is not so
important so that the spending from bonus
money did not have to be counted carefully.
The fifth items in Table 3 is
concerning about the gains and losses
obtained from the investment of monthly
money. We obtained that 19 respondents
gave response of strongly agree, 48
respondents answered agree, 30 answered
neutral, and 3 respondents answered
disagree. The number of respondents who
gave response of agree and strongly agree is
67 respondents or 67%. The average
obtained is 3.83 which indicates that on
average the respondents are influenced by
mental accounting in their investment.
The sixth items in Table 3 is
concerning the gains and losses obtained
from the investment of bonus money. Table
3 shows that 6 respondent answered
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strongly agree and 42 respondent people
answered agree, 45 respondents answered
neutral, 4 respondents answered disagree,
and 3 respondents answered strongly
disagree. This means that as many as 48
respondents or below 50% give an agree
answere on this item. The average of 3.44
indicates that the respondents are
influenced by mental accounting. This
question is related to the fifth question
where fewer respondents care about the
profit and loss of their bonus money
investment because a person with mental
accounting will be more concerned about
the profit and loss of his monthly money
investment than his bonus money
investment.
The seventh items in Table 3 is about
matching investment and sources of fund
for investment. Table 3 shows that 67
respondents gave agree response, 31
respondents answered neutral, the
remaining 3 respondents answered disagree.
The average earned of 3.71 indicates that
the respondent is influenced by mental
accounting in his investment.
From the responses of respondents
discussed above, individuals who exhibit to
mental accounting will tend to divide his
income into certain accounts or categories.
They will also treat the money received
differently according to the use of the
money. This is in line with the opinion of
Asri (2013) that mental accounting assumed
that humans divide their money into certain
groups (accounts) based on the purpose of
utilizing the money. Based on the above
data in Table 3, we can conclude that
investors who have filled the questionnaire
largely exhibit to mental accounting.
Tabel 3. Frequency distribution of respondents response results
No
Items
Frequency of respondents response:
mean
Strongly
disagree
Disagree
Neutral
Agree
Strongly
agree
1
I always allocate my
income into several
accounts
4
4
38
44
10
3.52
2
I always treat my
monthly income and
bonuses differently
6
-
32
51
11
3.61
3
I always calculate the
cost to be incurred from
my monthly money
6
-
34
51
9
3.57
4
I do not always
calculate the cost to be
incurred from my bonus
money
-
2
12
51
35
4.19
5
I always care about the
gains and losses that I
get from my investment
-
3
30
48
19
3.83
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Jurnal Ilmiah Ekonomi Bisnis Volume 24 No. 2 Agustus 2019
in the stock I choose
using my monthly
money.
6
I always care about the
gains and losses that I
get from my investment
in the stock I choose
using my bonus money.
3
4
45
42
6
3.44
7
I invests in the type of
investment that suits to
my income sources type
2
-
31
59
8
3.71
Regression result
Table 4 describes the regression result
of mental accounting (MA) variable on
Investment decision variable. The
coefficient of MA is 0.33 and significant.
Therefore, we can conclude that the
hypothesis that mental accounting affect the
stock investment decision of investors at
the Investment Gallery (GI) FEB UNIB and
investors at Sharia Investment Gallery
(GIS) IAIN Bengkulu, are accepted. Mental
accounting has influence on investor
investment decision.
Table 4 Regression Result
Variable
Coefficient
Std. Error
t-Statistic
Prob.
Constant
2.6259
0.2828
9.2849
0.0000
MA
0.3307
0.0889
3.7181
0.0003
R-squared
0.1236
Mean dependent var
3.6601
Adjusted R-squared
0.1147
S.D. dependent var
0.5445
S.E. of regression
0.5123
Akaike info criterion
1.5201
Sum squared resid
25.7232
Schwarz criterion
1.5722
Log likelihood
-74.0051
Hannan-Quinn criter.
1.5412
F-statistic
13.8242
Durbin-Watson stat
1.7175
Prob(F-statistic)
0.0003
Predictors: (Constant), MA (mental accounting).
Dependent variable is KI (investment decision).
Students mostly earn their monthly
money from their parents, and if they want
to invest, then they will use their monthly
money. In this study, we examined what if
they get the bonus money equivalent to the
monthly money. Will they treat both money
differently? Our study finds that most of
students (investors) treat the money
differently. This is called mental
accounting. Mental accounting will cause a
person to take irrational steps to place
money differently based on certain
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categories, such as how to earn money
(work, inheritance, gambling, bonuses, etc.)
or the nature of the use of his money
(recreation, need, and others) (Pompian,
2006).
Investors are given a questionnaire
with two forms the questioners, one with
multiple choice answers and another one
with Likert scale. The result of respondent’s
response on the multiple choices
questioners shows that on average
respondents appears to have some mental
accounting bias. It is proved that half the
respondents have mental accounting
thought, but not so badly. For example,
when they earn monthly money and bonus
money, they will treat the money
differently, for example in investing. When
they invest in monthly money, they tend to
invest a little of their monthly money.
While with the bonus money, most
respondents choose to invest with an
amount greater than their monthly money.
Because for them, the monthly money is
much more important than the bonus
money because after being scrutinized, they
are also more afraid of the risks they face
when they invest the monthly money than
the bonus money, and when there is a loss,
they will regret more of the losses they get
when they invest with monthly money
rather than their bonus money.
CONCLUSION AND SUGGESTION
This study has two main conclusions.
First, we found that investors at GI UNIB
and GIS IAIN Bengkulu exhibit to mental
accounting bias. Second, we found that
mental accounting has significant influence
on investor investment decision in stock.
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