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Abstract
Self-efficacy is a psychological construct based on the evaluations of one's ability to accomplish certain behaviours or achieve certain outcomes (Bandura, Citation1977). Although self-efficacy has been linked to health, task accomplishment, greater socio-economic status and income (Seeman and Seeman, Citation1983; Stretcher et al., Citation1986; Gecas and Seff, Citation1990; Judge et al., Citation2002; Zagorsky, Citation2007), there has been no study that investigates whether self-efficacy is also a predictor of greater wealth creation over a specific period of time. Applying a theoretical framework based on self-efficacy, this article investigates household financial behaviours using the National Longitudinal Survey of Youth (NLSY79) data-set. For the purpose of this study, change in wealth across time and financial market participation is modelled as a function of socio-economic and demographic variables drawn from prior literature. Findings from this research reveal that self-efficacy is indeed a predictor of investment for financial assets and is also a predictor of wealth creation across time.
Notes
1 Using the equation log b W 04 − log b W 94 = log b (W 04/W 94).