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CHAPTER 1: RESEARCH OVERVI EW

1.1 Title of study
Examining the difference between expected savings and actual savings for generation Y and
determining its causes.
1.2 Research background
In this paper, we are examining the difference between expected savings and actual savings in
Malaysia where expected savings are derived from undergraduates and actual savings are
derived from young working adults. From this difference, the following uestions will be
addressed. !hy do young people do not save as they intend to" #o they not place importance
towards their future" !hy would they fail in meeting their savings target" In answering these
uestions, the concept of behavioural finance is used.
$nder this concept, studies had shown that when making decision about the uncertainty %the
future for the purpose of the study&, human factors such as overconfidence, fear of regret and
human heuristics formed the basis for the theories under 'udgement for uncertainties %(ishore
)**+&. It is then proposed that these three theories formed the human factor that play a role in
the difference between expected savings and actual savings in Malaysia.
1.3 Problem statement
,he low savings rate among the young adults %generation Y& in Malaysia is becoming a
serious concern to the government and also to the well-being of the society. If this problem is
left to its own device, the Malaysian economy would be affected in the future.
.ccording to an article from The Malaysian Digest dated )* February )*/0, there is now an
increase of bankruptcy in Malaysia with over 012 of young adults3 aged between /4 to 56-
years-old are in serious debts due to living beyond their means. .ccording to the recent
statistics from the Malaysian #epartment of Insolvency %M#I&, there is an //2 rise in the
average number of monthly bankruptcies from )*/) to )*/5. 7n average, there are
approximately /,4/) people declared bankrupt per month last year %,he Malaysian #igest
)*/0&..
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1.4 Research objective
,he ob'ective of this research is to study the savings rate among young adults %generation Y&
and if there is discrepancy between expected savings and actual savings of generation Y, the
causes of the discrepancy as well. 8y the end of this paper, the policy makers such as the
Malaysia #epartment of Insolvency and .(9( %an agency set up by 8ank :egara& will be
able to appreciate the significance of this study concerning the discrepancy of expected
savings and actual savings of young adults along with its causes.
1.5 Research uestions
,he following research uestion is developed in response to achieve the research ob'ective
mentioned above.
• Is there a difference between expected savings from undergraduates compared to
actual savings among young working Malaysian adults"
If there is discrepancy between the expected savings and actual savings for young Malaysian
adults,
• !ould the causes of this discrepancy be among the human factors %overconfidence,
fear of regret, human heuristics& being tested here"
For better evaluation of the causes of discrepancy, the following set of uestions were
developed to determine if the causes for the discrepancy are among the human factors being
studied in this paper.
• Is there a difference between the undergraduates and the young working adults in
terms of overconfidence"
• Is there a difference between the undergraduates and the young working adults in
terms of having fear of regret"
• Is there a difference between the undergraduates and the young working adults in
terms of representativeness heuristics"
• Is there a difference between the undergraduates and the young working adults in
terms of availability heuristics"
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• Is there a difference between the undergraduates and the young working adults in
terms of anchoring and ad'ustments"
1.! "eed of study
.s mentioned above, more and more young adults from generation Y are being declared or
are on the verge of bankruptcy. !ith that in mind, it is vital that the savings behaviour of
these individuals to be studied thoroughly so that a proper solution can be implemented to
counter this problem. It ought also to be emphasis that these young adults would be the future
leaders of Malaysia. 7ur country would lose its future prospects if most of its future leaders
are declared as bankrupt. ;ere, this paper aims to be the first step on the path of studying
these young adults. <ike the saying by <au ,=e, a >hinese philosopher goes ?the 'ourney of a
thousand miles begins with a single step@. !ith the results from this study, M#I and .(9(
can work on creating campaigns and policies to tackle this problem at its roots.
1.# $co%e of study
,his paper will be focusing on the examining the difference between expected savings and
actual savings of generation Y in Malaysia along with its causes by testing the expected
savings and savings habit determinants on undergraduates while the actual savings and
savings habits determinants are tested on young working adults.
CHAPTER 2: LI TERATURE REVI EW
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2.1 &verconfidence
.lpert and Aaiffa in /B4) had shown that people being human are imperfect creatures. ,hey
are unable to exhibit accuracy in their estimations and are most often proven to overestimate
their capabilities due to a simple fact. ,hey recall on their success more often than be
reminded on their failures. 8eing so, the 'udgements made for the future are often rosier than
the actual fact.
7verconfidence is also closely related to the concept of estimation bias. 8y knowing the level
of confidence of a group of individuals, one may observe how they use their knowledge and
experience to over or under-estimate the variability in a situation. Individuals who are
overconfident often overestimate the depth of their knowledge. ,hey are stucked on the belief
that they know more when in reality they do not ((layman et.al /BBB&. In these situations, it
is common for them to 'udge and make decisions for various situations by basing it on a
familiar pattern. ,hey assumed that the future patterns will resemble the pattern that they are
familiar with and thus, the situation will be resolved. In addition, overconfident individuals
also have the tendency to underestimate risks around them %9ulford /BB+&. ,hey have high
confidence in themselves that they could not really be bothered about the side-effects of their
actions. ,aking all of these into consideration, people with a sense of overconfidence usually
exaggerate their abilities to control events or to solve issues.
Ctudies regarding overconfidence are usually done with a set of uestions consisting of a
minimum of two parts namely a general knowledge ui= and reflection uestions. ,hese
uestions will evaluate their actual knowledge and also to test their level of confidence with
their answers and their expected score from the ui=. From the numerous researches done, it
is found that people who are generally 4*2 confident of the accuracy of their answers will
have a score around +*2 for the ui= (9ulford /BB+&. From the figures here, it is shown that
the level of accuracy of answers will always be below the level of overconfidence of the
respondent.
2.2 'ear of regret
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Chiller in /BB6 had put forward a new theory which is the fear of regret. 8eing human, most
individuals do not like admitting their mistakes. ,hey have the tendency to feel pain and
regret at having to make errors. It is precisely because of this tendency, they became
irrational as oppose to rational because being rational would mean admitting that they had
made a mistake. ,his is also known as Dcognitive dissonance3 %(ishore )**+&.
#ecision made under fear of regret is also known as decision regret. #ecision regret is the
emotion felt as a conseuence of a decision which, after the fact, appears to have been a
wrong or poor decision %Michenaud and Colnik )**4&. For example, individuals may ask
themselves uestions such as ?what if I had not made that decision@ or ?if only I had chosen
this instead of what I did@. ,hese thoughts are called counterfactuals because they are counter
to what actually, or factually, occurred %8ailey and (inerson )**6&. Aegret may be a form of
emotion that creates additional psychological bias resulting in irrational contribution %(ishore
)**+&. !ith that, expectations and reality usually deviate from one another.
#ifferent people have different reaction to these regretful feelings %Michenaud and Colnik
)**4&. Come take it positively in such that in the fear of having more regret in the future, they
would have learnt from their previous flaws and mistakes. 7thers may take it negatively and
chose not to acknowledge the mistake because they are fearful that they would be unable to
face their regrets %(ishore )**+&. .nother group of people may 'ust choose to imitate
individuals who are thought to be better than them to avoid losing out.
2.3 (uman (euristics
2.3.1 Re%resentativeness heuristics
For representative heuristic, it is said that people typically evaluate the future by the degree to
which a situation is a representative of another situation and tend to neglect the background
of the situation. ,he word representative explains that when one is facing a new experience,
one tend to make a decision or 'udgement on a situation based on past experience %(ishore
)**+&. 7ne usually 'udges an event by taking a short history of information or data about a
similar past event. For instance, investors may look at past histories and data of rapid earning
growth of certain companies too far in the future and may overprice those shares. From here,
it can be seen that decisions may not be accurate as the information used to come up with a
decision may not be accurate %Chleifer )***&.
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It is common for people to ask knowledgeable individuals for help to snap a decision or to
give them a basis for assumptions. $nfortunately, when individuals do ask others for advice,
their ?advisors@ tend to be their spouses and friends, who do not necessarily ualify as
experts. !hen people do this, they gain in simplicity and speed, but ignoring the much more
complex reality of the situation resulting in inconsistency in estimations. %8enart=i and ,haler
/BBB&. 8asically, representative heuristics relies on stereotypes.
Aelying on past experience can provide uick decision making and thus could be beneficial
but it may 'ust not be that accurate. #epending on the reference point, the conclusion made
will either be underestimated or overestimated. 8earing all of this in mind, expectations of
the future will surely deviate from reality because decisions made from human heuristics
have little concrete evidence to support that decision.
2.3.2 )vailability heuristics
For availability heuristic, it is a mental shortcut that helps one make a decision based on how
easy it is to bring something to mind. In other words, people often rely on how easy it is to
think of examples when making a decision or 'udgment. Freuency on how often an event
occurs is important in availability heuristic because the more freuent an event occurs or a
decision is made, it is easier to be recalled compared to the infreuent ones. ,he ease, with
which such issues come to mind, provides the base for a 'udgement to be made %,versky and
(ahneman /B10&.
,he problem with availability heuristic is that people will assume that there are several
examples readily available in mind, such as an event or sub'ect matter as a base to make a
decision. ,he risk is when a situation is so uniue that there may be no similar situations
coming to one3s mind while making a 'udgement and this may lead to an underestimated
'udgement %,versky and (ahneman /B10&.
;owever, it may not be all that bad as there are many situations in which availability heuristic
could be useful. For example, itEs part of what makes one careful in dangerous situations
%(ishore )**+&. If one can think of a similar situation that ended badly for someone else, one
is more likely to be more cautious and could protect his or herself better. .s for savings, if
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one is able to evaluate other people3s percentage of savings from their pay, one is able to
make a decision on how much one should they save from their savings for a better future.
2.3.3 )nchoring and adjustments
.nchoring and ad'ustment on the other hand is making decision by selecting an initial
reference point %the anchor& and making small changes as additional information is received
and processed %Eaton )**0&. ,his reduces complex problem as all information is evaluated as
a whole even with the arrival of new information. #uring decision making, anchoring occurs
when individuals use an initial piece of information to make subseuent 'udgments. 7nce
setting the anchor, other 'udgments are made by ad'usting away from that anchor. #ue to this,
there will also be biasness towards interpreting other information around the anchor.
,he drawback with the anchoring and ad'ustment heuristic is that the values even after
ad'ustments are freuently insufficient. 9eople are only able to make minimal ad'ustments
most of the time and end up remaining 'ust close to the actual anchor. 9sychologists also
came up with findings that state that the ad'ustments remains insufficient most of the time
because after reaching a certain range close to the anchor, people tend to stop ad'usting
%Epley and Filovich )**+&.
2.4 *once%tual 'rame+ork
,he diagram below illustrates the framework of the study carried out in this paper. It is
formulated to explain the relationship of the independent variables %overconfidence, fear of
regret, representativeness heuristics, availability heuristics, anchoring and ad'ustment& and
the dependent variables %actual and expected saving behaviour&.
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7verconfidence
$ndergraduate
Caving
8ehaviour
7n the furthest left is the dependent variable which is the savings behaviour of the young
adults in Malaysia while, on the furthest right are the independent variables that are tested to
see its correlation to savings behaviour. In the middle, there is a divider line with
undergraduate and employed at respective ends. ,his line represents the difference between
expected savings %undergraduates3view& and actual savings %employed individuals3 view&.
,hus putting all of these together, one get a framework that says in studying the difference
between expected savings and actual savings, 'udgement under uncertainty theories such as
overconfidence, fear of regret, representativeness heuristics, availability heuristics, anchoring
and ad'ustment are being tested to see if there is any correlation to the difference between
expected and actual savings.
2.5. ,evelo%ment of conce%tual frame+ork
In the development of conceptual framework for this study, it is important to point out that
the young adults that are being studied here are individuals that fall under the generation Y
category. !ith that in mind, special attention had been given to the common characteristics of
the generation Y when developing this framework. ,hus a brief overview regarding
generation Y is provided below.
Feneration Y also known as the Entitlement Feneration, the <ost Feneration, the Millennials,
the Feneration Me Me Me, the !orst Feneration and the Yuppies is rather much the most
dislike generation in history %#urham )*/*&. ,hey are often labelled as spoilt brats with
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Fear of Aegret
Aepresentativeness
;euristics
.nchoring and
8enchmarking
.vailability
;euristics
Employed
extremely high sense of entitlement. 8asically, a large ma'ority of the other generations
dislike this particular generation and this is not without reasons.
8ased on a research done by 9rofessor 9aul ;arvey from the $niversity of :ew ;ampshire,
he had discovered that the generation Y respondents scored )62 higher than respondents
aged 0* to +*, and 6*2 higher than those over +/ in his test of measuring psychological
entitlement and narcissism. ,he professor also added on that due to these characteristics,
generation Y individuals tend to have an inflated view of themselves %!alsh )*/*&.
,his is further supported by explanation provided by Huffington Post dated /6 Ceptember
)*/5. .ccording to Huffington Post, generation Y unlike its parents, the baby bloomers, had
grown up in a positive and smoother life experience compared to its parents. ,he sense of
optimism and unbounded possibility are instilled within them. 8eing so, a special protagonist
identity is built deep into this generation. .s each of them think that they are special, it is not
surprising that they started demanding more simply because of the fact that they are in the
opinion that they deserved it %;uffington 9ost )*/5&.
2.5.1 Relationshi% bet+een e-%ected savings and actual savings
!ith reference to the explanation provided above concerning the generation Y, being
narcissistic, optimistic and having a high sense of entitlement, these individuals generally
have expectation that is nowhere close to reality. ,heir expectation is always higher than
reality resulting in them having unrealistic expectations %;ansen n.d.&. Young Malaysian
adults are very likely to have a sense of inflated view about themselves too as it is in the
$nited Ctates as they belonged in the same generation. ,hey would have high expectations
about their future prospects and certainly would expect more. 8ased on this, the relationship
between expected savings and actual savings is such that expected savings will be higher than
actual savings.
2.5.2 Relationshi% bet+een overconfidence +ith e-%ected savings com%ared to actual
savings
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7nce again in evaluating this, it is important to refer back to the brief overview provided
above regarding generation Y. 8eing part of generation Y, the young adults in Malaysia would
be filled with self-entitlement with an air of arrogance. ,his is more so to the Malaysian
undergraduates %the base for the study on expected savings&. $ndergraduates should have a
higher sense of overconfidence because it is during their university days where they would
feel that they are invincible and nothing could stop them in pursuit of their dreams.
Meanwhile, the working young adults have been exposed to the harsh working life. 8eing
already exposed, their level of overconfidence would be lower compared to the
undergraduates. Employed adults tend to be more realistic because of their knowledge and
experience gained while being in employment. For example, they have more varied and
complex life experiences and information feedback being older than the undergraduates.
,hus, the relationship to be observed here is that the undergraduates will have a higher level
of overconfidence as compared to the working individuals resulting in higher expected
savings compared to actual savings.
2.5.3 Relationshi% bet+een fear of regret +ith e-%ected savings com%ared to actual
savings
8ased on what is already known about the common characteristics of those in the generation
Y category, being narcissists, they often believe that they deserve a particular amount of
respect and rewards. ,hey are determined to get that and would not settle for lesser
treatments. !hen dealing with such individuals, it is expected that these individuals would
also have a high resistance toward accepting negative feedback %#urham )*/*&.
>onnecting this characteristic with the concept for fear of regret, this very same group of
individuals will have problems of admitting their faults and mistakes. ,hey would refuse to
admit that they are wrong because to admit their mistake is to say that they regretted their
actions. !ith the fear of regret, they would not be able to admit their mistake or the choices
they had made in the past and present. ,hey would often pro'ect their future self to be their
ideal-self such as being much more discipline in their spending habits. !ith that,
undergraduates will have a higher expected savings.
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2.5.4 Relationshi% bet+een re%resentativeness heuristics +ith e-%ected savings
com%ared to actual savings
,he life of the generation Y is largely connected to social media sites such as Instagram,
Facebook, ,witter and FoogleG. 8eing surrounded by such sites, a new world is created
where what everyone else is doing is broadcasted globally. :ot forgetting that they are also
filled with pride about themselves, these individuals will most often present an inflated
version of themselves on these sites rather than the truth. ,his would leave an impression that
everyone is doing very well %;uffington 9ost )*/5&.
!ith that in mind, when it comes to the undergraduates, the same situation should be able to
be observed. ,he undergraduates would also think that everyone they knew is doing well
financially. .s it is common for university students to feel that their peers3 opinion represents
them, it is said that this shows the presence of representativeness heuristics. <ike a typical
generation Y individual, it is also generally noted that university students are competitive in
terms that they believe that if their peers can do it, they could at least do as well as them or
even better. 8ecause of this precisely, when one of their peers exclaimed that he or she is
en'oying working life or that is living the dream life, the rest would follow suit leading to a
higher expectation of their future savings.
2.5.5 Relationshi% bet+een availability heuristics +ith e-%ected savings com%ared to
actual savings
<ike mentioned earlier for representativeness heuristics, generation Y is largely related to
social media sites. !ith that in mind, the availability heuristics here would be largely related
to the posting shown in these media sites. ;owever, these posts may not be a reflection of
reality because of the simple fact that people are prideful creatures especially those in the
generation Y category.
8eing filled with pride, not many friends and relatives would give an honest opinion about
the working environment. ,hey often describe life as being rosier than it is and that they are
doing well even if they are not. More often than not, even if they are honest, they would still
try to cover some aspects of the harsh working life as a means to motivate their younger
friends or relatives. Co, in terms of the undergraduates, whenever they try to recall on their
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friends3 and relatives3 experience on savings, they would recall of the numerous of times
%high freuency& these individuals described their rosy life and thus would overestimate their
future savings.
2.5.! Relationshi% bet+een anchoring and adjustments +ith e-%ected savings com%ared
to actual savings
Fenerally, those in the generation Y grew up in a positive, conducive and supportive
environment compared to the baby bloomers. Many had even gone to the extend to say that
the environment conditions surrounding the generation Y-ers are so good that it started
breeding spoilt brats in replacement of hardworking and tough baby bloomers %;ansen n.d.&.
#ue to such environment, whether they reali=ed it or not, they started being more dependent
on their parents compared to the other older generations at their age. ,his is especially true
for the undergraduates for the fact that they have not even started earning their own life
expenses.
Co, it is expected that undergraduates rely a lot on their parents because they have not left
Dthe nest3 yet. ,heir parents3 opinion and behaviour would be mirrored by the undergraduates
themselves. <ooking at how their parents are able to raise them in an environment where they
are able to live comfortably and are also able to satisfy their wants at the same time, the
undergraduates would assume that their parents are saving well. ,his assumption would lead
to a higher expectation of their future-self resulting in a higher expected savings compared to
reality.
2.! (y%otheses ,evelo%ment
H1: There is a difference between expected savings of undergraduates and actual
savings among young Malaysian adults.
,o evaluate this, this paper uses specific uestion concerning expected savings at particular
levels of income were given out to undergraduates. In determining the actual savings rate,
uestions concerning their income bracket and savings rate were given out to young
employed Malaysians.
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H2: The level of overconfidence is higher for undergraduates compared to young
working adults.
,his research paper used statements that exhibit characteristics of an individual with high
self-confidence to determine if the respondent is overconfident. 7verconfidence for the
purpose of the research is when an individual is overconfident about his or her own capability
that he or she will overestimate their ability to save resulting in a higher estimation of
expected future savings.
H: The level of fear of regret is higher for undergraduates compared to young working
adults
,his research paper used individual3s savings and spending behaviour %both in economic and
economic psychological& to determine fear of regret. Fear of regret for the purpose of this
study is referred to as an anxiety feeling that the individual feels when he or she realised that
they made a mistake.
H!: The level of representativeness heuristics present in undergraduates is higher than
young working adults.
,his research paper used peer groups to determine representativeness heuristics. It is
commonly noted that members in the same group and in the same environment will behave
similarly. ,heir behaviour will most often reflect the behaviour of the group in general. ,he
reason is people with similar preferences tend to belong to the same group.
H": The level of availability heuristics present in undergraduates is higher than young
working adults.
,his research paper used friends3 and relatives3 experience to determine availability
heuristics. ,his is so because the people surrounding individuals are none other than their
friends and relatives. 8eing so, the best source for the individuals to depend and reflect on
while making decisions will be none other than from the numerous amounts of time that they
hear about the working experience of their friends and relatives. ,hus, there should be a
correlation between the savings behaviour of young adults to the ease of bringing the
experiences of their friends and relatives to mind.
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H#: The level of anchoring and ad$ustments present in undergraduates is higher than
young working adults.
,his research paper used parental sociali=ation to determine anchoring and ad'ustments. ,his
is because the family environment always provided initial information or knowledge to their
members. ,hus, the undergraduates being young and lacking of life experiences are believed
to use their parents as an anchor more than those that already started working. !ith that in
mind, the level of anchoring and ad'ustments present in undergraduates should be higher than
young working adults.
CHAPTER 3: RESEARCH
METHODOLOGY
3.1 Research design
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,he study adopted here is an explanatory study with a deductive approach because the
emphasis of the research is on studying the difference between expected savings and actual
savings and also to explain the relationships between variables such as overconfidence, fear
of regret and human heuristics towards that difference. ,he research will be using scientific
principles whereby the study will move from theory to data %Caunders et.al )**B&.
3.2 Data collection methods
3.2.1 Sampling method
For this research, the data used will be primary data gathered from uestionnaires distributed
to undergraduates and young working adults in Malaysia. >onvenience sampling method is
used for the data collection. It is a method which draws representative data by seeking
individuals because of the ease of their volunteering or selecting them because of their
availability or easy access (<avrakas )**4&.
3.2.2 Target %o%ulation
,he respondents here are categorised into two groups and are collected separately. ,he first
group is the undergraduates. ,hey are individuals currently undertaking education after their
post-secondary education up to a bachelor3s degree. ,he second group is the young working
adults who consist of mainly fresh graduates who are currently employed and aged 5* years
and below.
3.2.3 ,evelo%ment of uestionnaire
In regards to the uestionnaires which were formulated in English, two separate sets were
created. Each of the set was customised to the targeted sample type. For each set, there are
two sections to it. ,he first section being the demographic profile customised as per the
targeted sample. ,he undergraduates would be answering to different uestions in this section
compared to the working young adults. ,he second section is the test for the various
independent variables. For this section, the test is the same for both groups. <ikert scales are
used in the second section to measure the responses. ,he structure for the uestionnaire was
adopted from >hat et.al )*/).
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8efore distributing the uestionnaire, a pilot study was done in ,aylor3s $niversity. Five
students and five ,aylor3s staffs aged below 5* were selected randomly to participate in the
pilot study. Each of these respondents was ask of his or her opinion concerning the
uestionnaire. .mong the uestions ask include, ?do you have any difficulties in
understanding the uestionnaire"@ and ?is there any part of the survey that you think we
could have improve on"@ .ll /* respondents were able to understand the uestionnaire and
encountered no problems in answering it. ;owever, there were some commented that the
uestionnaire have too many uestions even before starting to answer it.
From this feedback, a short session of restructuring the uestionnaire was done with the
lecturer supervising this study. .fter discussing and re-examining the uestionnaire, it is
determined that the most likely cause of this came from the way the uestionnaire was
numbered. ,he respondents would flip to the last page and see that there were 50 uestions in
total for section two. ,he number 50 would scare them and this would discourage them from
participating in the study. ,hus, to resolve this problem, the uestionnaire was renumbered.
Each page will begin with one again instead of having a continuous numbering system. .fter
this amendment, there are no more complaints about the uestionnaire having too many
uestions.
3.2.4 ,istribution of uestionnaire
,he uestionnaires were distributed through two ways. ,he first way being though online
Foogle survey forms and the second way being though paper uestionnaires. For statistical
analysis rule of thumb, a minimum of 5* is needed for the sample si=e (.gresti and Min
n.d.&. ;owever as there are two groups being examined here being the undergraduates and the
young working adults, the rule of thumb needs to be multiplied by two. ,hus, the minimum
sample si=e needed for this study to be statistically acceptable is +*.
. total of 0** uestionnaires were distributed via both mediums mentioned above and 50+
responses were collected back. 7ut of these 50+ responses, approximately half of it came
from undergraduates studying in Malaysia3s public and private universities such as,
$niversity Malaya, $niversity Malaysia of Cabah, $niversity Ccience Malaysia, $niversity
,echnology M.A., $niversity Malaysia of Carawak for the public universities and ,aylor3s
$niversity, Cunway $niversity, Monash $niversity, $niversity of ,unku .bdul Aahman,
Multimedia $niversity, $niversity of :ottingham for private universities. Meanwhile, the
other half of the gathered responses came from individuals aged 5* years old and below
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working in corporations from different industries such as oil and gas, accounting,
construction, I,, law, banking, police force, properties, media and advertising.
3.3 Measrement o! "aria#les
,he dependent variable for this study is the expected savings rate for the undergraduates and
actual savings rate for the young working adults. ,he independent variables are
overconfidence, fear of regret and human heuristics for both groups.
3.3.1 Dependent "aria#les
,he variables here are measured using multiple choice closed ended uestions. For expected
savings rate catered towards undergraduates, uestions such as asking about their likely
savings rate excluding E9F if expected salary is AM5,*** and AM6,*** respectively. ,he
respondents were given four choices of answers to choose from. For expected savings below
AM)6*, the response was coded as /)6. For expected savings between AM)6/ to AM6**,
the response was coded as 516. For expected savings between AM6*/ to AM/,***, the
response was coded as 16*. For expected savings above AM/,***, the response was coded as
/)6*. ,he codes are reflective of the average value of the savings range given except for the
fourth option where code is a generalised amount as working individuals aged 5* and below
%young working adults& are unlikely to save more than AM/,)6* per month on average.
For actual savings rate which were asked to the young working adults, two uestions were
asked. ,he first uestion is about the range of their monthly gross salary. For this uestion, a
total of four options were given to the respondents to choose from. For a salary below
AM),6** and between AM),6*/ to AM5,6**, the response was coded as /. For a salary
between AM5,6*/ to AM0,6** and between AM0,6*/ to AM6,6**, the response was coded
as ). >ode / represents that it is for the comparison against expected savings for an expected
salary bracket of AM5,***. >ode ) represents that it is for the comparison against expected
savings for an expected salary bracket of AM6,***.
,he second uestion asked was about their actual monthly savings from their net salary. <ike
it is with the expected monthly savings for the undergraduates, the options given for the
young working adults has four options. For savings below AM)6*, the response was coded as
/)6. For savings between AM)6/ to AM6**, the response was coded as 516. For savings
between AM6*/ to AM/,***, the response was coded as 16*. For savings above AM/,***,
Page 17 of 49
the response was coded as /)6*. ,he codes are reflective of the average value of the savings
range given except for the fourth option where code is a generalised amount as working
individuals aged 5* and below %young working adults& are unlikely to save more than
AM/,)6* per month on average.
3.3.2 $ndependent "aria#les
,he variables here are measured though a series of statements based on the theories
concerning overconfidence, fear of regret and human heuristics. ,he respondents were asked
to rank these statements using four likert scales whether they disagree or agree to the
statements. For strongly disagree, the response was coded as /. For disagree, the response
was coded as ). For agree, the response was coded as 5. For strongly agree, the response was
coded as 0
,o test for overconfidence, a set of seven statements were given. Each of these statements
exhibited a sense of confidence. Aespondents who chose mostly 5 and 0 here were deemed as
overconfident.
,o test for fear of regret, another set of seven statements given. ,he statements given
described a fear of having regretful feeling towards the present if they start thinking about
their future. Aespondents who chose mostly 5 and 0 here were deemed to have the fear of
regret.
In testing for human heuristics, three separate sets of statements were prepared. ,his is so
because human heuristics can be broadly classified into three sections namely,
representativeness heuristics, availability heuristics and anchoring and ad'ustments (Tver!"
and (ahneman/B15&. 8eing so, a test was prepared separately for each of the sections.
For representativeness heuristics, a set of seven statements were given. ,he statements were
designed to express the tendency of individuals to act according to the likelihood of an event
by comparing it to an existing prototype that already exists in their minds. For this study, the
prototype here is illustrated as their peers. ,hose that chose mostly 5 and 0 were deemed to
exhibit representativeness heuristics in their decision making.
For availability heuristics, a set of six statements were given to the respondents. ,he
statements were made to express the respondents3 tendency to make decisions regarding their
future by referring to a number of related events or situations that immediately spring to their
Page 18 of 49
thoughts. For this study, the events and situations are based on their friends and relatives.
Aespondents who chose mostly 5 and 0 were deemed to have used availability heuristics in
their process of decision making.
For anchoring and ad'ustments, a set of seven statements were given. <ike the other tests of
independent variables, the statements here were also created to express the characteristics of
those that use anchoring and ad'ustments in their decision making. For this research, this
variable is tested by basing the statement on describing their dependency on their parents as
the anchor or the cause of ad'ustment for their decision makings. ,hose that chose mostly 5
and 0 were deemed to have this characteristic.
3.4 Data anal%sis techni&es
,he data gathered from the uestionnaires were analysed using uantitative techniues from
I8M statistical package for social sciences %C9CC& of data editor. In this study, a few
statistical methods were used in analysing and interpreting the gathered data.
First of all, descriptive statistics will be used to provide a summary of the overall responses
gathered from the uestionnaires. ;ere, using freuency and crosstab, simple summaries
regarding the samples and the measures will be generated. Freuency distribution will be
helpful in generating of the freuency of occurrence of each score of value. >rosstabs on the
other hand, are freuency tables of co-occurring codes in two or more %categorical& variables
which make it a useful tool to compare and contrast the responses gathered from the two
groups %undergraduates and working individuals& in tabular form %Fray and (innear )*/)&.
In examining section two of the uestionnaire %likert scale part&, to test for internal
consistency, the 50 uestions from this section will also be tested for their >ronbach .lpha
value. >ronbach .lpha value ranges between * to /. ,he closer is the value to /, the higher is
its internal consistency. In addition to that, factor analysis will be used as a data reduction
techniue to summarise the essential information contained in the variables. Factor analysis is
a techniue that serves for the evaluation of the variability among observed, correlated
variables in terms of unobserved variables or better known as factors. ,his analysis will help
in reducing the number of variables and also to detect the structure of relationship between
variables %;ill and <ewcki )**1&.
Page 19 of 49
Cubseuently, the variance covariance between variables is tested using the statistical
significance of mean differences using Multivariate .nalysis of Hariance, M.:7H.. .s a
multivariate procedure, it is used when there are two or more dependent variables. ,o test for
statistical significance, individual p-values for each dependent variable can be found in the
statistical report provided %>arey /BB4&. M.:7H. is suggested for this study because this
study has more than one correlated dependent variables %expected and actual savings& and
that a single, overall test is needed for this set of variables instead of carrying out several
individual tests. Individual tests are not really a feasible method due to the time constraint for
this study.
.fter that, comparison of mean across two groups %undergraduates and working generation
Y& is done using independent t test to determine whether the mean difference between two
groups are significant or not by comparing the mean of expected savings to the mean of
actual savings. !ith this techniue, it can be determine if ;/ should be accepted or re'ected.
From the five components generated using factor analysis, each of the component will be
tested using comparison of mean across two groups %undergraduates and working generation
Y&. !ith that, it can be determined if there is significant difference between the two groups in
terms of each component. ,hus, it will be known if the hypotheses will be accepted or
re'ected %;) to ;+&.
CHAPTER #: RESULTS$ %I &DI &GS '
DI SCUSSI O&
4.1 &vervie+ of res%onses. /Refer to )%%endi- 1 and 20
Page 20 of 49
8efore going in depth about the results, an overall summary regarding the responses gathered
is made. ,his summary is based on their demographic profiles such as gender, age, marital
status, ethnicity, field of work or field of education and whether they are working or studying.
,hus to keep thing simple here, the summary will be using the freuency analysis in the
descriptive statistics. ,he figures will be expressed in terms of percentage using this analysis
to avoid bias interpretation as the sample si=e between the two tested groups %undergraduates
and working individuals& is different. ,he summary below and subseuent findings and
discussion will exclude one response from the working individuals group due to technical
errors during the data collection process.
7verall, 50+ responses had been collected across the two groups. 7ut of these responses,
662 of it came from undergraduates %/B/ individuals& and 062 came from the working
young adults %/60 individuals&. 8esides that, from these 50+ responses, /)2 of them aged )/
years old and below %0/ individuals&, +02 of them aged between )/ to )6 years old %))*
individuals& while )62 of them aged between )+ to 5* years old %46 individuals&. Further
information regarding the distribution of demography for the 50+ respondents can be found in
the table below.
Page 21 of 49
Page 22 of 49
4.2 Testing for internal consistency /Refer to a%%endi- 3a and 3b0
,o test for internal consistency, >ronbach3s .lpha is used. ,he reason of using >ronbach3s
.lpha is because the uestions designed in the uestionnaire all are using <ikert-type scales.
!ith <ikert scales, it is imperative to calculate and report >ronbach3s alpha coefficient to see
if there is internal consistency reliability for the scales that are used in this study. >ronbach3s
alpha reliability coefficient normally ranges between * and /. ,he closer the >ronbach3s
alpha coefficient is to /.*, the greater is the internal consistency of the items in the scale.
,he >ronbach3s .lpha for the entire data irrespective of its group is *.4)). ,his would mean
that there is high internal consistency for the 50 uestions from section two of the
uestionnaire. In other words, it would mean that these 50 uestions are measuring the same
construct. !ith *.4 as the >ronbach3s .lpha, all items appeared to be worthy of retention.
,here would be a greater increase in alpha if item // is deleted, but removal of this item
would only increase the alpha by *.**) %refer to the appendix for more information&.
For more detailed analysis, the >ronbach3s .lpha is measured again but this time separately
to see the internal consistency separately for each test group. ,he results are as shown in the
table below.
From the table, it can be observed that for both the groups, the value of >ronbach3s .lpha is
large. For the undergraduates, the value of their >ronbach3s .lpha is *.46) while for the
working individuals, the generated >ronbach3s .lpha is *.11). ,his would mean that the
internal consistency in each group is good and thus the results gathered from these uestions
are reliable. Co here, it appeared that all items are worthy of retention for both groups.
Page 23 of 49
4.3 'actor analysis /Refer to a%%endi- 4a and 4b0
.s mentioned earlier, a 9rincipal .xis Factor %9.F& of the 50 <ikert scale uestions from this
savings behaviour survey uestionnaire was conducted on data gathered from 50+
respondents. . closer examination on the (aiser-Meyer 7lkin measure of sampling adeuacy
suggested that the sample was factorable %(M7I*.45)&.
For the orthogonal rotation of solution, its results are as shown in appendix 5. ,hus, by
referring to appendix 5, it is shown that when loadings with a value lesser than *.5* are
excluded, the analysis yielded an eight-factor solution with a simple structure %factor loadings
IJ.5*&.
In addition to that, with reference to the Eigenvalue, C9CC had extracted seven components
from the 50 uestions in uestionnaire. ;owever, the uestionnaire was designed in such a
way that it is to test on five components such as overconfidence, fear of regret, representative
heuristic, availability heuristic and anchoring and ad'ustments. From here, it is discovered
that the 50 uestions were also measuring two extra components besides the five variables
that are being studied. ,herefore, the factor analysis was regenerated but this time the
components extracted were set to a limit of five. >omparing the leadings of the first set of
generated seven components to the later set of five components, it is found that there is no
difference for the seven components3 (M7 and the (M7 of the five components. #ue to
time constraint, the difficulties of identifying the extra two new components and seeing that
there is no difference between their (M7s, these extra components were dropped. !ith that,
subseuent studies are based on the later set of five components instead of the earlier seven
components generated. From here, the five components were identified upon closer
examination on the leadings contribution of each individual uestion to those five
components.
Page 24 of 49
!ith reference to the factor analysis of five components extracted in the appendix, all seven
items measuring anchoring and ad'ustments are loaded in Factor /. It is then deduced that
Factor / is a component measuring anchoring and ad'ustments. For Factor ), six items from
the seven items measuring representativeness heuristics are all loaded here. It is then
determined that Factor ) is a component of representativeness heuristics. ,he same method is
used to identify Factor 5 to Factor 6. .s all six items measuring availability heuristics is
loaded in Factor 5, Factor 5 is identified as a component of availability heuristics. .s all
seven items measuring overconfidence is loaded in Factor 0, Factor 0 is said to be a
component of overconfidence. <ast but not least, for Factor 6, as six items out of the seven
items measuring fear of regret are loaded in Factor 6, Factor 6 is deduced to be a component
of fear of regret. 8esides that, to further improve the values of the respective components,
one item was removed because it does not seem to measure the variable that it is designed to
measure on.
,hus, the overall summary of the identified factors generated using factor analysis is as
follows.
F.>/ F.>) F.>5 F.>0 F.>6
7verconfidence - - - 7 -
Fear of regret - - - - 7
Aepresentativeness heuristics - 7 - - -
.vailability heuristics - - 7 - -
.nchoringK ad'ustments 7 - - - -
4.4 M'()*' /Refer to a%%endi- 5 and !a 1 !b0
4.4.12o-3s Test of 4uality of *ovariance 5atrices
,he table below includes all
506 respondents. ,here is a
total /B/ undergraduate and
a total /60 employed
individuals.
,he table below includes )4)
respondents. ,here is a total /B/
undergraduates and a total of B/
employed individuals, earning
within the AM5,*** bracket a
month.
,he table below includes )60
respondents. ,here is a total of /B/
undergraduates and a total +5
employed individuals ,earning
within the AM6,*** bracket a
month.
Page 25 of 49
,his tests the null hypothesis that the observed covariance matrices of the five variables are
eual across groups. If the five factors in each of the groups are approximately eual, the
robustness of the M.:7H. tests is guaranteed %9hillips )**)&. ,he 8ox3s ,est of Euality of
>ovariance Matrices checks the assumption of homogeneity of covariance across the groups.
.s the sample si=es are uneual, the 8oxEs M will be using p L*.**/ as a criterion.
From the table above, it is shown that, there is no concern regarding the assumption of
homogeneity of covariance matrices of the five variables across the groups. ,his is so
because the F value for all the three box3s test of euality of covariance matrices are greater
than p value of *.**/ %*.)1J*.**/M *.)BJ*.**/M *.)5+J*.**/&. ,his indicates that there are no
significant differences between the covariance matrices because the tests showed that the
differences are insignificant. ,herefore, the assumption is not violated and comparison
between the groups is allowed.
4.4.2 Pillai6s Trace test
,he table below includes all 506 respondents. ,here is a total /B/ undergraduate and a total
/60 employed individuals.
,he table below includes )4) respondents. ,here is a total /B/ undergraduates and a total of
B/ employed individuals, earning within the AM5,*** bracket a month.
Page 26 of 49
,he table below includes )60 respondents. ,here is a total of /B/ undergraduates and a total
+5 employed individuals ,earning within the AM6,*** bracket a month.
.ll four tests explore whether the means for each of the groups are the same. 9illai3s criterion
is more robust and appropriate test for the purpose of this study because there are uneual
sample si=es between undergraduate and employed. %,weedy and <unardelli )*/*&
,he table above describes M.:7H. using the 9illaiEs ,race test. $sing an alpha level of
*.*6, the significant F indicates that there are significant differences among the groups
%studying and working& on a linear combination of the five independent variables. !ith the
value of 9illaiEs ,race as *.*4* and F value as 6.B/6, the test is said to be significant. ,his is
so because p L *.**6 %*.***L*.**6&. Co, it is concluded that the null hypothesis which states
that there is no difference is re'ected. ,herefore, there are significant differences between the
three groups in respect of the five variables. In addition, the observed power of this test is
high. !ith the value of multivariate n) as *.BB0, this indicates that approximately BB.02 of
the multivariate variance of the 6 factors is associated with the group factor.
4.4.3 7evene3s Test of 4uality of 4rror 8ariances
,he table below includes all 506 respondents. ,here is a total /B/ undergraduates and a total
/60 employed individuals.
Page 27 of 49
,he table below includes )4) respondents. ,here is a total /B/ undergraduates and a total of
B/ employed individuals, earning within the AM5,*** bracket a month.
,he table below includes )60 respondents. ,here is a total of /B/ undergraduates and a total
+5 of employed individuals, earning within the AM6,** bracket a month.
<evene3s ,est of Euality of Error Hariances tests for the assumption of M.:7H. to see if
the variances of each variable are eual across the groups. 8ased on the three tables above,
the significant value for most factors are greater than *.*6. ,he <evene3s test is thus deemed
to be insignificant for the five variables measures. ,his would mean that the assumptions are
not violated and is met for the five variables.
4.5 9nde%endent T tests /Refer to a%%endi- #: ; and <0
,o test for all the six hypotheses, independent sample ,-test method has been applied. ,he
reason of using this method is because of the fact that this study has different sample si=e for
the two tested groups which are the undergraduates and working individuals. Independent
sample ,-test is thus done to provide two statistical tests in interpreting the meaning of the
Page 28 of 49
hypothesis. ,he two statistical tests mentioned are the t-test for Euality of Means and the
<eveneEs ,est for Euality of Hariances. ,he t-tests or the F tests are to test for the differences
in the groups3 mean while the <evene3s test is to test for differences among group variances.
4.5.1 4-%laining T=test for 4uality of 5eans
,he independent-samples , test will assist the evaluation of the difference between the means
of two independent or unrelated groups. It also helps in determining whether the mean for the
two independent groups are significantly different from each other.
4.5.2 4-%laining 7evene6s Test for 4uality of 8ariances
,he <evene3s ,est for Euality of Hariances is to test for the assumption that the variances of
the two groups are eual. :otably, this is not the t test but is only an assessment of an
assumption. If the F test is shown not to be significant %Cig., p J*.*6&, the assumption is not
violated. ,hus, the eual variances line is the assumed line for the interpretation of the t test
and related statistics results. ;owever, if <evene3s F is statistically significant %Cig., p L
*.*6&, it is said that the variances are significantly different and the assumption of eual
variances is violated %not met&. !ith that, the uneual variances line will be the assumed line
in interpreting the t test and related statistics results.
In terms of ?eual variances not assumed,@ this line of results takes into account the >ochran
K >ox %/B61& ad'ustment for the standard error of the estimate and the Catterthwaite %/B0+&
ad'ustment for the degrees of freedom. In simpler terms, the line to be used if this is the case,
would be the bottom line of the t test for euality of means results table and the top line of
information will be ignored.
;ad the Cig. %p& value been greater than our a priori alpha level, the null hypothesis would be
retained and it will be concluded that there is no significant difference between the two
group3s variances. If the assumption of homogeneity of variance is met, the data from results
associated with ?eual variances assumed,@ should be examined and interpreted accordingly.
,hus, only the top line of information for the t test is used when analysing the results.
4.5.3 (y%otheses testing
Page 29 of 49
H1: There is a difference between expected savings of undergraduates and actual
savings among young Malaysian adults %&efer to appendix '(
!ith reference to the structure of the uestionnaire which can be found in the appendix, in
determining the expected savings rate and the actual savings rate, the savings rate are based
on income brackets. ,o keep things simple for the data analysis, there are two income
brackets namely, the AM5,*** salary bracket and the AM6,*** salary bracket. Co for the
undergraduates group, all respondents in this group will be providing estimates of their
savings rate based on these two income bracket. Meanwhile, for the working group, as each
individual could only have one actual salary, the respondents in these category will be
classified as per their salary bracket as in whether they would be under the AM5,*** salary
bracket or under the AM6,*** salary bracket.
,aking all these into consideration, there will be four groups in total. ,he first being the
AM5,*** undergraduates3 expected savings rate and the second being the AM6,***
undergraduates3 expected savings rate. For the first two groups, the total respondents for each
would be /B/ individuals as all the undergraduates answered for the estimation of savings in
terms of these two salary brackets. For the other two groups which are the AM5,*** working
individuals3 savings rate and the AM6,*** working individuals3 savings rate, the number of
respondents would be different being B/ individuals for those in the AM5,*** salary bracket
and +5 individuals for those in the AM6,*** salary bracket because an individual could only
have one actual salary. Co, t tests are carried out using the data from these four groups as
shown below.
Page 30 of 49
For C.H5***N.>,vsEO9 %AM5,*** salary bracket&, the F value for <evene3s test is /5.5+1
with a Cig. %p& value of *.*** which is greater than the alpha value of *.*6 %0.000 L *.*6&.
!hereas for C.H6***N.>,vsEO9 %AM6,*** salary bracket&, the F value for <evene3s test
is B.)0B with a Cig. %p& value of .**5 which less than the alpha of *.*6 %0.003 L *.*6&.
!ith reference to these figures, both null hypotheses %no difference& for the assumption of
homogeneity of variance is re'ected and therefore, it can be concluded that there is a
significant difference between the two group3s variances. Cince the variance of groups is
uneual, the t-test results on the second row should be reported.
From here, it is observable that the difference of the saving rate from the AM5,*** salary
bracket %AM5( group& compared across the two groups %expected savings from
undergraduate and actual savings from the employed& is not significant. ,his is deduced from
the sig figure of *.///. .s *./// is greater than *.*6, the difference between the two groups
are insignificant. ,his is further supported by the observation that shows that there is very
little difference %being *.)*6& between the mean for both groups.
Meanwhile for the AM6,*** salary bracket %AM6( group&, from the comparison across the
two groups, it is observable that the difference of saving rate compared across the two groups
is significant. ,his is said so because the value of sig here is lesser than *.*6 %*.*** L *.*6&
and is also supported by the observation of clear mean difference between those two being
*.6*B.
Page 31 of 49
,o conclude for this hypothesis, it seems that the difference is not significant for AM5(
group but is significant for the AM6( group. ,he reason to this could be because when the
salary is low, there is really not much that can be saved and the undergraduates know this.
!ith that, it will be hard to observe savings behaviour at lower levels of income. ,hus, the
difference between expected and actual savings rate will most likely to be insignificant. 8ut
as the salary increases, savings behaviour will be more observable.
$sing a simple common sense concept here, assuming that income had increased and
expenses are constant, savings should have been increased as an effect from the increased
income. >onversely, same goes when income is reduced. Cavings rate would have been
reduced when all other factors remained constant %ceteris paribus&. ,hus, the relationship
between income and savings is a positive relationship %they move in the same direction&.
.nother reason to this could because of the common mentality of the society. 9eople often
thought that they will save more when they earn more. ;owever, the sad truth is that the more
you make, the more you spend %8akke )**B&. ,his is because the society had failed to
recognise that when an individual have a higher income, his or her lifestyle will tend to
change. !ith an improvement in standard of living, the expenditures of such individuals will
also increase. ,hus bearing this in mind, the difference between expected savings and actual
savings should be more obvious at higher income bracket.
.lthough ;/ is re'ected for the AM5( group, this group is continued to be tested upon for
the other five hypotheses because ;/ is only re'ected for this group when p is lesser than
*.*6. ;/ would had been accepted at p lesser than *./6. It depends on the level of accuracy
tested.
H2: The level of overconfidence for undergraduates is higher than young working
adults. %&efer to appendix ) and *(
5(N.>,vsEO9P
Page 32 of 49
6(N.>,vsEO9P
For C.H5***N.>,vsEO9 %AM5( group&, the F value for <evene3s test is /.45/ with a Cig.
%p& value of *./11 which is greater than the alpha value of *.*6 %*.++4J*.*6&. !hereas for
C.H6***N.>,vsEO9 %AM6( group&, the F value for <evene3s test is *.66/ with a Cig. %p&
value of *.064 which is more than the alpha value of *.*6 %0.458 J *.*6&. ,hus, both the null
hypotheses %no difference& for the assumption of homogeneity of variance are accepted and it
is concluded that there is no significant difference between the two group3s variances. Co, the
assumption of homogeneity of variance is met. .s this is so, the t-test results on the first row
should be reported instead of the second row.
<ooking at the first row, for the AM5( group, ;) is re'ected because the value for sig here is
*.++4 which is greater than the p value of *.*6. ,his is further supported by the small mean
difference of *.*60B. Meanwhile for the AM6( group, ;) is accepted because the value of
sig here is *.**/ which is lesser than the p value of *.*6. ,his is further supported by the
generated large mean difference of *.0B)/.
,he reason behind the re'ection of ;) for the AM5( group could be due to the fact that
working individuals with a salary bracket of AM5,*** are usually the fresh graduates that had
'ust started working. #ue to this, there really is not much difference in terms of level of
overconfidence between the working and the studying group. ,his is said because fresh
graduates are still fresh in the working world. Co, with little to no working experience, their
Page 33 of 49
level of overconfidence remained untainted and unchanged. ,hus, it is not surprising to see
that the hypothesis is re'ected for ;) in this group.
Meanwhile the reason for the acceptance of ;) for the AM6( group will most likely be due
to the fact that those with an actual salary bracket of AM6,***, had at least more than a year
of working experience. !ith more working experience, their level of overconfidence would
had been tainted by the harsh reality surrounding the working world and thus in all
probability should have been lowered. ,hus, it is very reasonable to see that ;) is accepted
for this group.
H: The level of fear of regret between undergraduates is higher than young working
adults %&efer to appendix ) and *(
5(N.>,vsEO9P
6(N.>,vsEO9P
For C.H5***N.>,vsEO9 %AM5( group&, the F value for <evene3s test is /.6)5 with a Cig.
%p& value of *.)/4 which is greater than the alpha value of *.*6 %*.)/4J*.*6&. !hereas for
C.H6***N.>,vsEO9 %AM6( group&, the F value for <evene3s test is *.//* with a Cig. %p&
value of *.10/ which is greater than the alpha value of *.*6 %0.741 J *.*6&. Co, the null
hypotheses %no difference& for the assumption of homogeneity of variance is accepted for
Page 34 of 49
both groups %AM5( group and AM6( group&. !ith that in mind, as the variance of groups is
eual so only the t-test results on the first row should be reported.
<ooking at the first row, ;5 for the AM5( group is accepted as its sig value is lesser than p
value of *.*6 %*.**4L*.*6& with a mean difference of *.5515. For the AM6( group, ;5 is
also accepted as its sig value is also lesser than the p value of *.*6 %*.**5L*.*6& with a mean
difference of *.055*.
.s both hypotheses are accepted, there is significant difference between the means across the
undergraduates and working individuals in terms of level of fear of regret irrespective of
whether it is under the AM5( group or the AM6( group.
,he reason behind this is most likely because the moment the individual enters the working
world, their attitude towards refusing to admit mistakes had to change. If they refused to do
so, they would not have last long in employment. Co, the difference is very clear between the
studying group and the working group in terms of fear of regret.
H!: The level of representativeness heuristics present in undergraduates is higher than
young working adults.
5(N.>,vsEO9P
6(N.>,vsEO9P
Page 35 of 49
For C.H5***N.>,vsEO9 %AM5( group&, the F value for <evene3s test is /.45* with a Cig.
%p& value of *./11 which is greater than the alpha value of *.*6 %0.177>0.*6&. !hereas for
C.H6***N.>,vsEO9 %AM6( group&, the F value for <evene3s test is *./44 with a Cig. %p&
value of *.++6 which is greater than the alpha value of *.*6 %0.5 J *.*6&. 8oth null
hypotheses %no difference& for the assumption of homogeneity of variance are accepted. Cince
the variance of groups is eual, the t-test results on the first row should be reported.
<ooking at the first row, ;0 for the AM5( group is re'ected because its sig value is greater
than the p value of *.*6 %*.104J*.*6& with a small mean difference of *.*0/*. Meanwhile for
AM6( group, ;0 is also re'ected because its sig value is greater than the p value of *.*6
%*.+16J*.*6& with a small mean difference of *.*+//. .s both hypotheses are re'ected, it is
said that there is no significant difference in the level of representativeness heuristics between
the studying group and the working group regardless of them being in the AM5( group or the
AM6( group.
,he reason behind the re'ected of the hypotheses for both income bracket groups could be
due to fact that the working respondents and the studying respondents are within the same
age range. ,hey are basically around the same age. ,hus, the perception and attitude of these
groups of individuals towards peer influence should somewhat similar. 8eing young and
fresh, they will have a tendency to seek for advices from their peers. Co whether or not they
are studying or they are working, they still seek for guidance from their peers as they still
have little experience in life. It is also possible that being part of generation Y, they are
simply too la=y to think and decide on their own. ,hey seek to make decision based on their
peers3 experiences to avoid making an effort of analysing and working out a solution.
H": The level of availability heuristics present in undergraduates is higher than young
working adults.
Page 36 of 49
5(N.>,vsEO9P
6(N.>,vsEO9P
For C.H5***N.>,vsEO9 %AM5( group&, the F value for <evene3s test is *.5B0 with a Cig.
%p& value of *.65/ which is greater than the alpha value of .*6 %*.65/J*.*6&. !hereas for
C.H6***N.>,vsEO9 %AM6( group&, the F value for <evene3s test is *.B/6 with a Cig. %p&
value of *.50* which is greater than the alpha value of *.*6 %0.340 J *.*6&. 8oth null
hypotheses %no difference& for the assumption of homogeneity of variance are accepted. .s
the variance of groups is eual, the t-test results on the first row should be reported.
<ooking at the first row, ;6 for the AM5( group is re'ected because its sig value is greater
than the p value of *.*6 %*.*+)J*.*6& with a small mean difference of *.)510. Meanwhile for
the AM6( group, its ;6 is accepted because its sig value is lesser than the p value of *.*6
%*.**/L*.*6& with a big mean difference of *.0+)1.
,he reason behind the insignificant difference in the level of availability heuristics between
the studying group and the working group for the AM5( group is because those with an
actual salary bracket of AM5,*** are usually those 'ust started working. ,hese individuals
normally have less than a year of working experience. 8eing so, the people around them are
still those with the undergraduates3 characteristics. ,heir knowledge about the reality of life is
still unpolished and is still at the same level as an undergraduate. ,hus having said that, it is
Page 37 of 49
not surprising that there is no significant difference between the studying and working
individuals in the AM5( group for availability heuristics.
,he reason behind the significant difference in the level of availability heuristics for those in
the AM6( group is due to the years of experience gained from being in employment. ,hose
with an actual salary bracket of AM6,*** normally have at least a year of working
experience. .s they had worked more, their circle of networks and also their knowledge
about facts of life should be significantly higher than the undergraduates. ,hus bearing this in
mind, with more knowledge, the reliance on availability heuristics would most likely to be
lower as one started working. 7n the other hand, having a wider circle of networks could
cause a difference in availability heuristics too as this would also mean that the company that
the working individual keeps will be different from the company kept in their university days.
,he wider the circle of networks, the freuency of coming across similar experience multiple
of times will be lower resulting in a lower level of availability heuristics too. ,his is because
wider networks would mean having contacts from all walks of life. Individuals with diverse
backgrounds are unlikely to have share similar experiences. ,he experiences shared should be
very diverse too.
H#: The level of anchoring and ad$ustments present in undergraduates is higher than
young working adults.
5(N.>,vsEO9P
6(N.>,vsEO9P
Page 38 of 49
For C.H5***N.>,vsEO9 %AM5( group&, the F value for <evene3s test is 4.406 with a Cig.
%p& value of *.**5 which is lesser than the alpha value of *.*6 %*.**5L*.*6&. ,hus, the null
hypothesis %no difference& for the assumption of homogeneity of variance is re'ected. Cince
the variance of groups is not eual, the t-test results on the second row should be reported.
!hereas for C.H6***N.>,vsEO9 %AM6( group&, the F value for <evene3s test is *.*/5
with a Cig. %p& value of *.B*4 which is greater than the alpha value of *.*6 %0.!08 J *.*6&.
,he null hypothesis %no difference& for the assumption of homogeneity of variance is
accepted. Cince the variance of groups is eual, the t-test results on the first row should be
reported.
<ooking at the second row for the AM5( group, ;+ is re'ected because the sig value for this
group is greater than the p value of *.*6 %*./**J*.*6& with a small mean difference of
*./41B. <ooking at the first row for the AM6( group, ;+ is also re'ected because the sig
value for this group is greater than the p value of *.*6 %*.)06J*.*6& with a small mean
difference of *./+B5.
,he reason behind the re'ection of ;+ for both AM5( group and AM6( group, could be due
to the fact that the studying group tested here are from the generation Y. Feneration Y
typically have a high sense of self entitlement. 8eing so, it is very likely that they thought
themselves to be superior to their parents. ,hinking they are superior, they would not even
consider using their parents as a benchmark while making a decision for their future. ,he
working group on the other hand had started working and earning their own income. !ith
that, their reliance onto their parents would have been very much lesser. !ith lesser reliance,
the tendency of using their parents as a benchmark in decision making would lessen too.
,hus, in that sense, the undergraduates and the working individuals would not be very
different in their level of anchoring and ad'ustments.
4.!. $ummary of findings
Page 39 of 49
(y%othesis 3>?)*Tvs4@P 5>?)*Tvs4@P
(1 Ae'ect .ccept
(2 Ae'ect .ccept
(3 .ccept .ccept
(4 Ae'ect Ae'ect
(5 Ae'ect .ccept
(! Ae'ect Ae'ect
7verall, from the discussion above, in the AM5( group, all of the tested hypotheses are
re'ected except for ;5 while for the AM6( group, all the tested hypotheses are accepted
except for ;0 and ;6.
CHAPTER (: CO&CLUSI O&$
LI MI TATI O&S A&D
RECOMMA&DATI O&S
5.1 *onclusion
Page 40 of 49
In conclusion, there is indeed a difference between expected savings and actual savings. It is
found that the higher is the tested income bracket, the higher would be the discrepancy
between the expected and actual savings.
In the case for those in the AM5,*** salary bracket and the AM6,*** salary bracket,
representativeness heuristics and anchoring and ad'ustments, do not seem to contribute to the
discrepancy between expected savings and actual savings. Instead, the cause of this
difference is due to factors such as overconfidence, fear of regret and availability heuristics.
From the tests carried out, it is proven that there is indeed a significant difference in the levels
of overconfidence, fear of regret and availability heuristics for the undergraduates and the
young working individuals. ,he undergraduates have a significantly higher level of
overconfidence, fear of regret and availability heuristics compared to the working
individuals.
,his would mean that the undergraduates in Malaysia are still living in their own fantasies
and had failed to reali=e that life is not a bed of roses. It is only upon exposing themselves to
the real working world, they would begin to understand that they had been sheltered and
pampered by their respective parents that they had failed to see that the world is not as
beautiful as it is in their imagination. ,hus, once started working, their level of
overconfidence along with fear of regret and availability heuristics would have changed. It is
also likely that because this study is done onto individuals around the same age, the
difference between representativeness heuristics and anchoring and ad'ustments is not yet
significant. !ith longer and more working experience, it is likely that these two factors will
show a significant difference too.
,hus, the M#I and .(9( in Malaysia should take notes of these factors. ,hey should direct
more of their campaigns to burst the bubble of fantasies of these undergraduates so that they
will be more aware of their expenses and would be able to have a clearer idea on savings
upon entering the working world. !ith more exposure and knowledge, the youths in
Malaysia will spend lesser part of their lives being lost in reality and could spend more of
their time working on cultivating a good savings habit.
5.2 7imitations
,here are several limitations in this study due to the adopted research methodology. First of
all, the samples gathered are not representative of the actual population. ,his is because the
Page 41 of 49
type of sampling method used in this research is convenience sampling. It draws
representative data by seeking individuals because of the ease of their volunteering or
selecting them because of their availability or easy access %<avrakas )**4&. 8ecause of this,
in all probability, the samples gathered will be bias towards the population that is easily
approachable instead of the general population %actual population&.
In addition, a ma'ority of the respondents that participated in this study are females, being
+52 of the total number of respondents. 8ecause of this, it is very likely that the results
gathered here are reflecting the attributes of the females from generation Y towards savings
instead of reflecting the entire generation Y. In terms of ethnicity, a large part of the responses
came from >hinese respondents %0B2&. #ue to this, the results from this study may not be
representative of all Malaysian as the respondents are mostly >hinese with only 5*2 and
/42 of the responses from the Malay and Indian respondents respectively.
Furthermore, there is also limitation in the uestionnaire design too. ,he measure for
independent variables which is in section two of the uestionnaire is based on self-evaluation
using 0 likert scales. !hen using self-evaluation method, the responses gathered are
sub'ected to biasness %>hai et.al )*/)&. ,his is because not all respondents are truthful and
there will always be some that would be answering the uestions randomly. !ith that, the
results from the uestionnaire may be distorted.
5.3 Recommendations
8ased on the limitations mentioned above, subseuent studies should be done in a more
precise manner with a longer duration for the research. !ith the time constraint for this study,
there is not much that can be done besides providing the basis for subseuent researchers.
Further researches should be done using the actual population of generation Y in Malaysia.
,herefore, other methods of sampling should be used instead of convenience sampling.
,here are many areas that future researchers could look into. First of all, they could consider
studying the savings behaviour of generation Y using a ualitative approach such as carrying
out interviews. Interviews will enable the researcher to go in depth about the hidden agenda
behind their savings attitudes.
8esides using different research methods, future researchers can also consider doing a
longitudinal research design whereby they would be studying a set of respondents over time.
!ith a study over time, the researcher can observe the changes and the shifts of savings
Page 42 of 49
behaviour as the undergraduate matures and enter the working field. ,he researcher can also
observe how their savings habit change when they have higher salary. !ith this method, the
researcher will be able to determine the pattern of changing savings behaviour for generation
Y.
Furthermore, studying the difference of savings habits in terms of demographic difference
would make a very interesting study too. Future researchers can study the difference in
savings pattern for different ethnicity in Malaysia. #ifferent ethnicity may cause a difference
in mentality which in turn will affect how an individual saves. Marital status and occupation
of an individual would also make good independent variables to be tested against savings
behaviour. ,he savings behaviour of a single person and a married person will no doubt be
very different. ,he sense of responsibility alone between these two categories would have
already impact their savings habit.
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