GLOSSARY OF TERMS
1. Introduction Background
2.3. Elimination of problems solved by other researchers
L Nunan© M B A Dissertation
Table 2-6: UKZN MBA dissertation students per population group Population group
Black Coloured Indian Other White Total
Number of students - March 2006
100 4 109
0 36 249
Number of students - September 2006
- - - 0 - 231
Source: Personal correspondence, GSB Administration Department (September 2006).
In September 2006, there was a reduction in the number of students to 231 due to students having completed their studies or deregistered from the university (personal correspondence, GSB Administration Department, 2006).
L Niman© MBA Dissertation
Table 2-7: Statistics of single females living in Gauteng Single Female Statistics
Number of single females Number of single working females Number who have a university degree Number who earn an income between:
R5 000 and R5 999 R6 000 and R6 999 R7 000 and R7 999 R8 000 and R8 999 R9 000 and R9 999
Number who have cheque accounts Number who have a savings account Number who have credit cards Number who have life insurance Number who have a pension policy
Rand(R) 1 074 252 398 565 20 700 23 020 18 202 11 345 9 751 1 128 44 733 231 433 34 234 60 816 33 023
Source: van Tonder (2006).
Maginn and Turtle (1990) describe demographics as the fairly straightforward classification of people based on facts and circumstances such as age, wealth, income, family situation and occupation, whereas, psychographics describe psychological characteristics of people. Their analysis involves the process of classifying people based on their personalities and the needs that derive from them.
In terms of a gender based study by Jacobs-Lawson (2003), four demographic factors (age, income, marital status, and educational level), and four psychological variables (i.e., knowledge of retirement planning, retirement goal clarity, subjective risk tolerance, and future time perspective) were analysed to understand how these factors affected the retirement planning of females.
The findings of Jacobs-Lawson (2003) in the above-mentioned study indicate that developmental differences exist in the variables that influence women's asset allocations and the information women consider when making investment decisions. In terms of the responses, the researcher found that women with a higher knowledge of retirement planning were more risky and chose more options in their allocations for the younger hypothetical investor than in their allocations for the older hypothetical investor. She reports that regression analysis for the self-investment task failed to show that the demographic variables have a direct influence on allocation risk, but, with respect to the psychological variables subjective risk tolerance was positively related to allocation risk.
- 2 9 -
L Nunan© MBA Dissertation
To date the most popular psychographic models are the Barnewall Two-Way Model of passive and active individual investors and the Bailard, Biehl and Kaiser Five- Way Model that classifies investor personalities into individualist, adventurer, celebrity, guardian and straight arrow types by focusing on two aspects of personality: the level of confidence and the method of action (Meyers,2006).
Herbst (2000) classifies individual attitudes towards risk according to the economic concept of utility, which is a measure of personal satisfaction. The writer defines greater utility as when something provides more pleasure (or less pain) than something else. According to the study the curve of a risk averter (or risk averse person) depicts diminishing marginal utility, the curve of the risk-neutral (or risk-indifferent person shows a constant marginal utility and the curve of a risk lover illustrates increasing marginal utility, suggesting greed. He further explains that most individuals have utility functions that exhibit properties of risk aversion, risk neutrality or risk seeking for different ranges of monetary values.
Schott and Arbeiter (1999) profiles investors as the: "I Can't Stop Worrying Investor", Power Investor, Inheritor, Impulsive Investor, Gambler, "Make Me Safe Investor", and the Confident Investor. Kathleen Gurney of the Financial Psychology Corporation classifies investors into the "Nine Money Personalities", which include profiles of: Safety Players, Entrepreneurs, Optimists, Hunters, Achievers, Perfectionists, Producers, High Rollers and Money Masters (Meyers, 2006).
A Swedish study by Keller and Siegrist (2006), identifies individual investors based on their attitude toward financial security, stock investing, obsession with money, perceived immorality of the stock market, gambling, interest in financial matters, saving, frankness about finances into four segment termed safe players, open books, money dummies, and risk-seekers. The above researchers report that each of these segments make different decisions regarding investment portfolios, risk tolerance, price changes, social and environmental responsibility and the purchase and sale of securities.
Strong (2004) considers the use of representativeness and availability heuristics, loss aversion, fear of regret, myopic loss aversion, herding, anchoring, an illusion of control, prospect theory mental accounting, asset aggregation, hindsight bias, overconfidence, framing, biased expectations and reference dependence as common established behaviours among investors. Bajtelsmit and van Derhei (1997) give a
L Nunan© M B A Dissertation
hypothesized reason for the different risk attitudes as having to do with the perceptions of risk rather than the reactions to a given level of risk.
A Canadian study undertaken by Pond (1991), classifies investors according to their investment in real estate, as risk-tolerant investors (where the investors have
"money to burn" or "wishes to go for broke" as a way to add earnings), risk-sensitive investors (who are interested in the size of the market relative to other assets and have heavy demands for cash to satisfy liability) and inflation-sensitive investors (who pay beneficiaries in real goods and services, not in nominal cash, for example health and retirement benefits).
The above review shows that the studies that have been undertaken by other researchers are limited to, for example, the classification of investors based on (1) psychometric models of personalities, or (2) demographics, or (3) marital status, (4) retirement planning, and (5) gender. Therefore, another reason for the relevance of the empirical study is that there is no study that provides an overall academic perspective on the attitudes (preferences), demographics and personal circumstances (constraints, expectations and objectives) of MBA dissertation male and female students, by collectively examining these attribute and behavioural variables.