RESEARCH CONCEPT PAPER

Millennials on Financial Decisions: Responsible or Not?

Brief Description of the Study

Financial decision making, as one of the essential factors in a nation’s economic progress

and social well-being, is an aspect which an individual should put value into. This study aims to

show how specific personality traits and demographic factors such as income level, marital

status, age, gender, educational background and social media influences affect working

millennials’ approach to financial decisions and to what extent these factors hold them

responsible or irresponsible when it comes to financial decision making.decision making. This

study focuses on the working millennials within Region X and adapts the Big 5 personality

scales of McCrae and Costa.

Background of the study

Millennials – born between the early 1980s until 2000 which is the most racially diverse

generation (Cutin, Gallicano, & Matthews, 2011; Weber, 2015) between ages 15 to 35–make up

about one-third of the Philippine population and the government classifies 47 percent of them

comprise the workforce (http://www.manilatimes.net/working-with-millennials/312500/). This

generation hailed as “digital natives” is often attributed to as lazy slackers and impulsive set of

individuals (DeVaney, 2015; https://www.cnbc.com/2015/04/20/are-millennials-lazy-entitled-

narcissists.html).https://www.cnbc.com/2015/04/20/are-millennials-lazy-entitled-

narcissists.html).

In the future there will be a massive shift in creating wealth among this generation

(Kobler, Hauber, Ernst, n.d.; Lusardi & Oggero, 2017). With ages 18 to 34 at present, millennials
are about to enter their prime earning years and being self-employed as an entrepreneur will most

likely accelerate the increase of assets; and in much developed countries, 54 percent of them

plans to start their own businesses while 27 percent are already self-employed (Kobler, Hauber,

Ernst, n.d.). However, PriceWaterhouseCoopers’s (2015) study revealed that 34 percent were

very unsatisfied with their current financial situation; nearly 30 percent are overdrawing their

checking accounts; and 42 are heavy users of alternative financial services such as payday loans

and pawnshops. These are few reasons why millennials are labelled financially fragile.

Conversely, Nga and Leong (2013), who conducted a similar study among the

undergraduate students of a business school in KlangValley, Malaysia, argued that financial

decision making is not always made in a rational manner. Several researches were conducted to

determine the behavior influencing factors and attempt to explain and understand the degree of

influence these factors have in the decision-making process (Powell & Ansic, 1997). The theory

of behavioral finance shows the relationship of social and psychological concepts toward

investments such that personal values, emotions, personality traits, and societal influence affect

subjective perception of reality in financial decision making (Krishnan & Beena, 2009; Olsen,

2010).. On one hand, according to Das & Jain’s (2014) study, age, gender, income and education

affects investors’ preferences and attitudes towards investment decision based on their

investment objectives (as cited in Lewellen, Lease, Schlarbaum, 1997).

However, not much is still known as to these classified financial decision-making

behaviors. Decision makers become successful when they are focused and equipped with a

process to lead them through their conversations than if they let these conversations just happen

along the way (Sabri, 2016 as cited in Schwarber, Rausch, Peters, Osborne, & Snowden, 2005).
 This study addresses this gap by analyzing whether personality traits and demographic

factors have significant influence on financial decisions among working millennials. Also, this

study will help promote a better understanding and communication toward the subject of

financial decision making as well as aid the misconception the society has tagged to the

generation as time passes.

Research Problem/Objective

In this study the researchers attempt to address the gap between working millennials and

society’s perception to the former’s stance in decision making by focusing on the following

questions:

1. What are the effects of demographic factors on individual’s financial decision making?

2. What is the association between demographic factors and individual’s financial decision

making?

3. What are the effects of personality traits on individual’s financial decision making?

4. What is the association between personality traits and individual’s financial decision

making?

5. To what extent can millennials be responsible decision makers or not?

Moreover, the researchers attempt to determine which among the above-mentioned traits

and factors could cause them to be responsible or irresponsible financial decision makers.

Vriens & Achterbergh (2013) argue that responsible decision making is different from the

normal decision making thus it requires specific tools of measure. They further contended that

responsible decision making should contribute to a morally valuable end. That is, decisions

should take into account the societal values such as the quality of life of societal members. In

addition, several studies suggest that cognitive biases may be beneficial in decision making
(Tversky and Kahneman, 1974 as cited in Busenitz & Barney, 1997; Simon, 2000) because they

lower the risk perception of an individual (Simon, 2000) and that individuals with cognitive

make-up that is less likely to be associated with failure (Gudmundsson & Lechner, 2013).

Expected Output

At the end of this study the researchers expect to provide substantive evidence refuting

the common unfavorable notions among the millennials concerning their incapacity toward

financial decision making.

The researchers plan to gather knowledge about the topic through literature review. Studies

related to behavioral finance, effects of demographic factors to financial decision making, attitudes

of millennials and influence of social media to millennials are relevant to the study.

After a thorough research and discussions, the researchers will conduct a survey to a set of

working millennials as respondents with the personality traits and demographic factors as

variables included in the questionnaire. The National Financial Capability Study survey will

serve as its guide which is used by PwC’s (2015) similar study regarding millennials and their

status toward financial decision making. Also, the researchers are expected to follow the

proposed timeline of research activities to produce a more substantive and meaningful study.

The study will utilize a minimum of 400 samples of working millennials within Region X.

Nga and Leong (2013) conducted a survey adapting the Big Five Personality Scale from McCrae

and Costa, and which also considers demographic factors as variables such as age, gender, income

level, marital status, social media influence, and educational background toward risk attitude and

cognitive biases. A pretest among 50 respondents will be performed prior to the conduct of the

survey to ascertain the consistency of the questionnaire. Cronbach Alpha will be used to ascertain

the reliability and validity of the scales which was also utilized in related studies.
 The researchers plan to gather primary data through online survey and secondary

data from related studies and statistics. A related study conducted by Sadiq and Ishaq (2014)

identified risk as a dependent variable while demographic factors as the independent

variables. However, in this study, risk aversion, cognitive biases and social responsible

investing will also be considered as the dependent variables while personality traits and

demographic factors will be identified as independent factors in relation to the risk attitude

of working millennials which affects their financial decision making. Quantitative and

qualitative method will also be used in the study. Hypotheses will be tested using multiple

linear regressions, Mann-Whitney U Test and N-Way ANOVA methods (Nga and Leong

(2013); Das and Jain (2014); www.statisticalsolutions.com/manova-analysis-anova/).

 Reseach Activity Timeline
submission and revision of full paper
review of the paper
abstract
conclusion and reccomendation-revision
conclusion and reccomendation-drafting
methodology consultation andrevision
methodology-drafting
introduction consultation and revision
introduction-drafting Start Date
Duration
RRL consultation and revision
review of literature-drafting
data analysis
conduct of survey and collecting of data
approval of questionnaires
pretest among 50 respondents
revision
consultation of questionnaires
drafting of questionnaires
concept paper submission
References:

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DeVaney, S. (2015). “Understanding the millennial generation”, Society of Financial Service
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http://www.manilatimes.net/working-with-millennials/312500/
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