Does hedonism influence real estate investment decisions? The moderating role of financial self-efficacy

Abstract

The goal of this paper is to emphasize the importance of prioritizing pleasure and enjoyment in the properties being invested in over financial returns. This research aims to determine the impact of hedonism on an individual’s real estate investment decisions, with financial self-efficacy acting as a moderator. The study employs a quantitative, cross-sectional research approach, and data was collected from retail investors (homeowners and prospective home buyers) using a structured questionnaire. A total of 375 responses were obtained through snowball sampling. Further, PLS SEM was taken into consideration to test research hypothesis. The study’s findings indicate that an individual’s hedonism value has a significant positive influence on real estate investment decisions. Moreover, we found that financial self-efficacy has a significant negative impact on hedonism and real estate investment. One possible reason is that individuals with high financial self-efficacy may be more likely to analyse the financial details of a real estate investment carefully and make decisions based on a well-informed understanding of the potential returns and risks. It has also been observed that both age and income contribute positively to the decision to invest in real estate. This means that a young person is more likely to make risky investments like buying real estate stocks, land, etc. When individuals become older, real estate investment in the form of houses increases in order to provide a secure and comfortable living space for themselves and their families. Finally, when income rises, individuals seem to be looking for a comfortable life, pleasure, happiness, and social recognition, which significantly influence the real estate investment decision.

Keywords:

• Real estate investment
• hedonism
• financial self-efficacy
• values

Public Interest Statement

The impact of hedonism and real estate investment decisions is a subject of significant interest in both academics and practitioners. This study examines the moderating role of financial self-efficacy in the relationship between hedonism and real estate investment decisions. The study finds that financial self-efficacy significantly moderates the relationship between hedonism and real estate investment decisions. Individuals with high levels of financial self-efficacy are less likely to be influenced by hedonistic factors in their real estate investment decisions. The findings suggest that financial self-efficacy plays a crucial role in shaping investment decisions, especially when hedonistic factors come into play. The study provides insights for policymakers and investors in understanding the underlying mechanisms that drive investment decisions and highlights the importance of financial literacy and education in enhancing financial self-efficacy.

Disclosure statement

The author(s) did not disclose any possible conflict of interest.

Additional information

Funding

The author(s) acknowledged no financial support for conducting this research.

Notes on contributors

Sharmila Devi R

Sharmiladevi R is pursuing a Ph.D. at the Vellore Institute of Technology (VIT), Vellore, Tamil Nadu, under the supervision of Dr. Swamy Perumandla on the topic of Direct Real Estate Investment Decisions. She has completed bachelor’s degree in B. Tech (Chemical Engineering) from Madras University and Master’s Degree in MBA (Finance and Human resources) affiliated with Anna University. Her research interests include investment decisions in stock and real-estate markets and personal financial management behaviour.

Swamy Perumandla

Perumandla Swamy is an Assistant Professor of Finance at VIT-Business School (VITBS), Vellore Institute of Technology (VIT), Vellore, Tamil Nadu, India. He received his Ph.D. in Finance from the National Institute of Technology Warangal (NIT-W), India. His research and teaching interests include Financial Econometrics, Development Economics, and International Financial & Commodity Derivative Markets.