Thomas Korankye’s research while affiliated with University of Arizona and other places

This study examines the effects of financial advice on college-saving decisions using data sets from the 2009 and 2012 U.S. National Financial Capability Study. After controlling for self-selection bias through propensity score matching, the findings show that receiving financial advice is associated positively with the likelihood of saving for children’s college education. Other findings reveal that seeking specific types of financial advice relating to savings/investment, insurance, and tax planning is positively associated with a household’s decision to allocate money for their children’s postsecondary education. The ensuing discussion highlights that policies incentivizing households to seek financial advice could promote college savings and contribute to reduction in student loan dependence.

This study examines how engagement in financial management activities influences well-being using nationally representative data (N = approximately 30,000) from the U.S. Bureau of Labor Statistics’ American Time Use Survey and its associated Well-Being Modules. The current study estimates ordered probit models for several measures of experiential well-being, which consider how meaningful an activity is for a household and how happy, sad, tired, in pain, and stressed respondents felt during the activity. Controlling for a standard set of demographic and socioeconomic factors, the econometric results indicate that households report lower utility gains (lower happiness, greater sadness, and higher stress) when engaging in financial management activities relative to other activities. Furthermore, the results suggest increases in household time allocated toward performing financial management activities is associated with a lower (higher) likelihood of being very happy (very stressed) compared to other activities. The findings strongly indicate that households perceive financial management activities as vexing, reinforcing the need for financial stewardship support to promote household well-being.

This study examines whether a predictor of loss aversion sensitivity is related to investors' existing financial position. Using two measures of loss aversion sensitivity, we find no statistically significant difference in loss aversion sensitivity between those with low and high levels of financial assets. Higher degrees of loss aversion sensitivity are found to be strongly associated among investors with financial assets between $1,000 and$99,999. The empirical results suggest that the relativity of existing financial assets provides an explanation for how the marginal value of decisions involving the potential for losses are assessed by investors. We conclude that investors' current financial position provides relativity for experienced losses, and that loss aversion sensitivity is related to the marginal value of investors' current existing financial position.

Purpose Although annuitization provides insurance against longevity risk that can benefit households, researchers have uncovered an annuitization puzzle, which suggests households are reluctant to annuitize their wealth. This study contributes to the discussions on the annuitization puzzle by examining investor sophistication and owning annuities in non-retirement accounts. Design/methodology/approach The study utilizes data from the 2018 U S National Financial Capability Study (NFCS). The empirical analyses are based on logistic regression estimates of annuity ownership on investor sophistication. Interpretations are based on odds ratios. Findings The findings indicate that investor sophistication contributes to the annuity puzzle. Investors with low objective and high subjective investment knowledge (overconfident investors) are more likely to own annuities compared to those with low objective and low subjective investment knowledge. However, investors with high objective and low subjective investment knowledge (under-confident investors) are less likely to choose annuity ownership compared to those with low objective and low subjective investment knowledge. The findings and ensuing discussion highlight the importance of annuitization when planning for retirement, with implications for financial service professionals. Research limitations/implications The measure of investor sophistication does not assess the difficulty level of each financial knowledge question. The questions used to construct the investor sophistication variable are based on general investment knowledge. In addition, the annuity ownership variable used in this study pertains to investments outside retirement accounts. Despite these limitations, the findings highlight the importance of annuitization when planning for retirement. Originality/value Unlike prior studies, the authors consider four mutually exclusive measures of investor sophistication constructed from measures of objective and subjective investment knowledge to understand the effect of investor sophistication on annuity ownership in the United States.

Purpose This study examines the association between financial literacy confidence and financial satisfaction. The authors posit that overconfident poor performers will experience greater levels of financial satisfaction and underconfident high performers will experience lower levels of financial satisfaction. Design/methodology/approach Based on the results of an objective financial literacy assessment and a subjective financial literacy assessment, variables measuring study participants' financial literacy overconfidence and financial literacy underconfidence are constructed. The variables are analyzed for their associations with financial satisfaction. Findings The results from the multivariate analysis suggest that financial literacy overconfidence (underconfidence) is associated positively (negatively) with higher levels of financial satisfaction and is associated negatively (positively) with lower levels of financial satisfaction. Practical implications The discussion first highlights that to increase objective financial literacy, the disconnect between subjective financial literacy assessment and objective financial literacy must be recognized. Secondly, the discussion encourages financial literacy and education programs to incorporate behavioral education, which can provide learners with an awareness of the role of financial literacy confidence when making financial decisions. Originality/value Financial literacy overconfidence can result in an inability to recognize the realities of one's financial situation. Individuals who are overconfident in their level of financial literacy preformed lower on an objective assessment of their financial literacy, yet also tended to have a greater sense of financial satisfaction. This finding not only suggests that financial literacy overconfidence results in financial ineptitude, but also suggest that financial literacy overconfidence can result in specious conclusions regarding one's financial situation. The financial literacy underconfidence finding suggests that those who are financial literate, and who are also underconfident in their financial literacy, are less likely to have high financial satisfaction.

Purpose This study aims to examine the subjective well-being of self-employed persons relative to wage employees in Ghana. Two measures of subjective well-being, comprising life satisfaction and happiness, are considered. Design/methodology/approach The current study focuses on Ghanaian working adults, uses pooled cross-sectional datasets from the 2005 to 2014 World Values Survey (WVS), applies survey weights, estimates ordered probit models and computes marginal effects. Findings The results show that being self-employed is associated with a lower probability of being satisfied with life than being wage employed. The result for happiness is negative but not statistically significant. The perceived low level of life satisfaction among the self-employed in Ghana could explain the rationale behind the desire of some Ghanaians to seek wage employment rather than pursuing self-employment. The results also could partly explain the non-survival of some entrepreneurial firms in Ghana over time. Research limitations/implications Data relating to factors such as business size, location (urban or rural), degree of internationalization (domestic or foreign), number of years of being in self-employment, the number of employees, financial knowledge and behavior and personality traits are unavailable in the WVS for analyses. The present study also uses a pooled cross-sectional dataset for the analyses; thus, causal inferences are not possible. Originality/value The study provides empirical evidence on the relationship between self-employment and subjective well-being in the context of Ghana. The study provides insights into how self-employed Ghanaians perceive well-being relative to wage employees.

Little attention has been given to how Hispanics differ from non-Hispanics in the well-being they experience while engaging in elder care. This paper uses the 2012 and 2013 American Time Use Surveys (ATUS) and their corresponding Well-being Modules (WBM) to examine how elder care is associated with experiential well-being and how this differs for Hispanic and non-Hispanic caregivers. The sample is limited to regular caregivers for the elderly as defined in the ATUS. Ordered probit models are estimated for several measures of experiential well-being, separately for Hispanic and non-Hispanic subsamples. These measures include how meaningful an activity episode is for a respondent, and how happy, sad, tired, in pain, and stressed they felt during the activity. Standard controls, including health status of the respondent, are included as regressors. Results suggest that, while Hispanics reported a greater psychic benefit (happiness and meaning) when engaging in elder care compared to other daily activities, they also reported higher sadness levels when caring for household members. Although the direct cause of sadness cannot be identified, these conflicting results are consistent with the literature suggesting that, even though Hispanics value collectivistic culture traits, such as familism and have positive caregiving examples from family members, they also have weaker support networks and are reluctant to report burden.

This study finds a negative effect of holding student-loan debt on the life satisfaction of household heads using longitudinal data from the 2011 to 2017 U.S. Panel Study of Income Dynamics and a fixed-effects modeling approach. Although debt is taken to improve future utility, it provides disutility to the head of household until it is paid off. Thus, financial planners and educators should remind their clients about the consequences of holding student-loan debt in the short term, not just the future benefits.

This study examines if households experience utility gains by selecting one of its members to specialize in its financial management. Utilizing data that are collected from the Health and Retirement Study, a variable measuring households’ level of financial specialization (HFS) is first constructed. The HFS variable is examined for its association with household utility, measured in this study as financial satisfaction, income satisfaction, and life satisfaction. The evidence provided strongly indicates that a household that selects one of its members to specialize in its financial management experiences utility gains.

This study examines how caring for pets and walking, exercising, or playing with pets is associated with the experiential well-being of older Americans using activity-episode-level data from the 2010, 2012, and 2013 American Time Use Surveys (ATUS) and their associated Well-Being Modules (WBM). Estimating a series of ordered probit models that relate various measures of experiential well-being to different measures of pet-related activities, the results show that caring for pets is associated with greater meaning than other activities, controlling for a standard set of demographic and other person-level characteristics. Walking, exercising, or playing with household pets or animals is associated with greater happiness and meaning and less stress relative to other activities. The results from sensitivity analyses show that the magnitudes of the associations for people who live alone are larger than for those who live with others.