Financial loss aversion illusion and sophistication
The table shows anticipated and experienced loss aversion coefficients for different groups of investors and reports financial loss aversion illusion (FLAI) as the difference between the two coefficients. In parentheses the p-values of a Wald test are reported, testing for λ = 1, or of a one-sided t-test testing for FLAI = 0 or , respectively. Low financial literacy includes all investors with less than four correct responses in the financial literacy test, low wealth is investors with a financial wealth of less than £150,000, and low experience is investors with <20 years of investment experience (self-reported).
| Group variable . | Anticipated λ . | Experienced λ . | FLAI () . | Δ FLAI groups . |
|---|---|---|---|---|
| Full sample | 2.19 (0.009) | 1.15 (0.434) | 1.04 (0.046) | – |
| Financial literacy | ||||
| Low | 4.31 (0.004) | 1.32 (0.330) | 2.99 (0.083) | 2.75 (0.106) |
| High | 1.26 (0.469) | 1.03 (0.885) | 0.23 (0.300) | |
| Wealth | ||||
| Low | 3.43 (0.006) | 1.50 (0.114) | 1.93 (0.122) | 1.14 (0.257) |
| High | 1.70 (0.145) | 0.91 (0.671) | 0.79 (0.086) | |
| Experience | ||||
| Low | 3.74 (<0.001) | 0.83 (0.515) | 2.91 (0.017) | 2.18 (0.075) |
| High | 2.00 (0.027) | 1.27 (0.248) | 0.72 (0.132) | |
| Group variable . | Anticipated λ . | Experienced λ . | FLAI () . | Δ FLAI groups . |
|---|---|---|---|---|
| Full sample | 2.19 (0.009) | 1.15 (0.434) | 1.04 (0.046) | – |
| Financial literacy | ||||
| Low | 4.31 (0.004) | 1.32 (0.330) | 2.99 (0.083) | 2.75 (0.106) |
| High | 1.26 (0.469) | 1.03 (0.885) | 0.23 (0.300) | |
| Wealth | ||||
| Low | 3.43 (0.006) | 1.50 (0.114) | 1.93 (0.122) | 1.14 (0.257) |
| High | 1.70 (0.145) | 0.91 (0.671) | 0.79 (0.086) | |
| Experience | ||||
| Low | 3.74 (<0.001) | 0.83 (0.515) | 2.91 (0.017) | 2.18 (0.075) |
| High | 2.00 (0.027) | 1.27 (0.248) | 0.72 (0.132) | |
Financial loss aversion illusion and sophistication
The table shows anticipated and experienced loss aversion coefficients for different groups of investors and reports financial loss aversion illusion (FLAI) as the difference between the two coefficients. In parentheses the p-values of a Wald test are reported, testing for λ = 1, or of a one-sided t-test testing for FLAI = 0 or , respectively. Low financial literacy includes all investors with less than four correct responses in the financial literacy test, low wealth is investors with a financial wealth of less than £150,000, and low experience is investors with <20 years of investment experience (self-reported).
| Group variable . | Anticipated λ . | Experienced λ . | FLAI () . | Δ FLAI groups . |
|---|---|---|---|---|
| Full sample | 2.19 (0.009) | 1.15 (0.434) | 1.04 (0.046) | – |
| Financial literacy | ||||
| Low | 4.31 (0.004) | 1.32 (0.330) | 2.99 (0.083) | 2.75 (0.106) |
| High | 1.26 (0.469) | 1.03 (0.885) | 0.23 (0.300) | |
| Wealth | ||||
| Low | 3.43 (0.006) | 1.50 (0.114) | 1.93 (0.122) | 1.14 (0.257) |
| High | 1.70 (0.145) | 0.91 (0.671) | 0.79 (0.086) | |
| Experience | ||||
| Low | 3.74 (<0.001) | 0.83 (0.515) | 2.91 (0.017) | 2.18 (0.075) |
| High | 2.00 (0.027) | 1.27 (0.248) | 0.72 (0.132) | |
| Group variable . | Anticipated λ . | Experienced λ . | FLAI () . | Δ FLAI groups . |
|---|---|---|---|---|
| Full sample | 2.19 (0.009) | 1.15 (0.434) | 1.04 (0.046) | – |
| Financial literacy | ||||
| Low | 4.31 (0.004) | 1.32 (0.330) | 2.99 (0.083) | 2.75 (0.106) |
| High | 1.26 (0.469) | 1.03 (0.885) | 0.23 (0.300) | |
| Wealth | ||||
| Low | 3.43 (0.006) | 1.50 (0.114) | 1.93 (0.122) | 1.14 (0.257) |
| High | 1.70 (0.145) | 0.91 (0.671) | 0.79 (0.086) | |
| Experience | ||||
| Low | 3.74 (<0.001) | 0.83 (0.515) | 2.91 (0.017) | 2.18 (0.075) |
| High | 2.00 (0.027) | 1.27 (0.248) | 0.72 (0.132) | |
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