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The Joint Effect of Social Comparison and Social Distance on Evaluation of Intertemporal Choice Outcomes in Event-related Potential Studies
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Scarcity mindset's positive association with using alternative financial services.

George Rooney1, Cäzilia Loibl1

  • 1Department of Human Sciences, The Ohio State University, Columbus, Ohio, United States of America.

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Summary

A scarcity mindset, feeling a lack of resources, is linked to using alternative financial services. This connection holds true across all income levels, highlighting its importance in financial behavior.

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Area of Science:

  • Behavioral Economics
  • Financial Psychology

Background:

  • The scarcity mindset, characterized by a perceived lack of resources, can influence decision-making.
  • While it may help address immediate needs, it can also lead to oversight in other areas.
  • Understanding its impact on financial service utilization is crucial.

Purpose of the Study:

  • To investigate the association between a scarcity mindset and the use of alternative financial services (AFS).
  • To determine if this association persists independently of known AFS predictors.
  • To examine if the relationship varies across different household income levels.

Main Methods:

  • Utilized data from the 2021 FINRA National Financial Capability Study (N=24,349).
  • Employed binary logistic regression analyses to assess the relationship.
  • Controlled for established predictors of AFS use and socio-demographic factors.

Main Results:

  • A stronger scarcity mindset was significantly positively associated with the use of alternative financial services.
  • This association remained significant after controlling for other predictors and socio-demographic variables.
  • The scarcity mindset predicted AFS use across all income groups, including high-income individuals.

Conclusions:

  • The scarcity mindset is a significant predictor of alternative financial services use, irrespective of household income.
  • Findings suggest the need to consider the psychological impact of scarcity on financial choices.
  • Implications extend to evaluating the role of scarcity mindset in emerging financial products like fintech applications.