Dataset Information

Time is money: Rational life cycle inertia and the delegation of investment management.

ABSTRACT: Many households display inertia in investment management over their life cycles. Our calibrated dynamic life cycle portfolio choice model can account for such an apparently 'irrational' outcome, by incorporating the fact that investors must forgo acquiring job-specific skills when they spend time managing their money, and their efficiency in financial decision making varies with age. Resulting inertia patterns mesh well with findings from prior studies and our own empirical results from Panel Study of Income Dynamics (PSID) data. We also analyze how people optimally choose between actively managing their assets versus delegating the task to financial advisors. Delegation proves valuable to both the young and the old. Our calibrated model quantifies welfare gains from including investment time and money costs as well as delegation in a life cycle setting.

SUBMITTER: Kim HH

PROVIDER: S-EPMC5363991 | biostudies-literature | 2016 Aug

REPOSITORIES: biostudies-literature

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Time is money: Rational life cycle inertia and the delegation of investment management.

Kim Hugh Hoikwang HH Maurer Raimond R Mitchell Olivia S OS

Journal of financial economics 20160406 2

Many households display inertia in investment management over their life cycles. Our calibrated dynamic life cycle portfolio choice model can account for such an apparently 'irrational' outcome, by incorporating the fact that investors must forgo acquiring job-specific skills when they spend time managing their money, and their efficiency in financial decision making varies with age. Resulting inertia patterns mesh well with findings from prior studies and our own empirical results from Panel St ...[more]

PMID: 28344380

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Project description:Purpose Some commercial/industrial sectors have increased their interest in sustainability, in some cases changing their business focus, from a profit-centered approach to a more balanced view, including environmental and social factors. It means that the interest in sustainability is increasing. Life cycle management (LCM) is a methodology/concept that can contribute to this paradigm shift. In this research, the potential application of LCM in the bakery segment was investigated, considering the entire value chain related to the sector (inputs, packaging, suppliers, customers, waste management). Methods Bakeries were visited, in Teresina, Piauí, Brazil, to learn about the products, services, production processes, and the socio-environmental and economic sustainability practices, aiming at identifying bottlenecks and to propose alternatives based on LCM. Besides the field approach, the study was structured based on the literature that brings the concepts and potentialities of applying LCM in various economic/industrial sectors. The PDCA cycle and the SWOT Matrix were also used to assist the implementation of LCM. A roadmap was proposed aiming at the LCM implementation in bakeries. Results The results show that although the sector has some environmentally sustainable practices (waste separation, energy savings, reuse of products, inputs purchased locally), the primary intention is to reduce costs and not to mitigate environmental impacts. Regarding social responsibility, they donate bread to institutions. This is an important attitude, but not the only one for fulfilling the social role within the value chain. They do not consider suppliers that show concern for the environment (certified companies), and both marketing and product labels do not evoke these issues too. Conclusions and recommendations Thus, there is the possibility of implementing LCM in bakeries if there is a concern with sustainable production and consumption. A roadmap for implementing LCM in bakeries was proposed including some steps: mapping the life cycle of products/processes/services associated with the sector; analyzing factors that can influence the actions towards sustainability; disseminating life cycle information to the entire value chain; efficient waste management, including the partnership with recycling companies; and treatment of the collected data and improvement proposal, using management tools such as the PDCA Cycle, the SWOT Matrix, and Environmental, Social and Governance (ESG) aiming at the search for environmental and economic sustainability and social fair alternatives. Supplementary information The online version contains supplementary material available at 10.1007/s11367-021-02008-7.

Dataset Information

Time is money: Rational life cycle inertia and the delegation of investment management.

Publications

Time is money: Rational life cycle inertia and the delegation of investment management.

Similar Datasets

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