INSTRUCTIONS:
Read the article below and Write a 250 to 300-word response. The reply must make a recommendation
of a peer reviewed journal article that provides additional information on the
topic. In your response, you should give a summary of the article in your own words and discuss
why it is relevant to the forum topic. It must be different than articles reference in the article below. Include an APA formatted in text citation and at the bottom of the reply.
Introduction
Self-control is a personality trait. Self-control failure results in the inability to resist self-control failure, temptations, and impulses. It also leads to issues such as education, savings, retirement, and obesity (Duckworth et al., 2019). In this situation, individuals exhibit suboptimal behaviors. Low self-control is an aspect of personality observed by peculiarities such as smoking. (Baumeister and Heatherton,1996; Ariely and Wertenbroch,2002). Self-control in response is a trait, not a state that can change in duration (Uhr et al.,2021). From the early years, humans could suppress one urge in favor of a goal-oriented rival appetite (Eisenberg, Smith, & Spinrad, 2011). Willpower describes "this straightforward, brute-force approach to doing what is in one's best interest when an alluring alternative beckon" (Mahoney & Thoresen, 1972). Self-control failures can happen at any age, although the ability to control impulses improves through adolescence and early adulthood (De Luca et al., 2003; Baumeister, Heatherton, and Tice, 1994). In economics, it was introduced through the dual-self model and self-controlled planner. According to this model, these models usually coexist in a conflicted state in the individual (Thaler and Shefrin,1981). Self-control explains undersaving and non-participation decisions (Uhr et al.,2021). The intent is to show that Self-control and self-control-failure determine the individual's financial beliefs and overall habits.
Current trends
People who practice self-control have healthier and wealthier lives. Self-control involves habits such as exercising, forgoing dessert, to saving for retirement. There is an ongoing battle going on among individuals. (Duckworth et al.,2018). Temptations and rewards often interfere with people setting long-term goals and trading them for short-term ones. It does not help that everything is so convenient for consumers ( Akst, 2011).In addition, self-control does not matter if people are mistaken about the advantages and disadvantages of their choices (Duckworth et al., 2018).
Self-control failure can cause factors such as overtrading. Self-control failure remains high regarding trading activity and the same for overconfidence, sensation seeking, attention-grabbing, gambling preferences, and other social contagions. Smokers, in addition, have more months with trades and higher trading values that they buy or sell (Uhr et al., 2021).In regard to savings, more smokers sought a savings device or plan. However, they did not maintain these plans (Uhr et al.,2021). Distortions often occur in these cases. In financial markets, savings distortions generate asset price distortions.
Moreover, disagreements affect aggregate investments. The investment levels should be reasonable, not unreasonable or distorted. The planner should have the ability to identify correct beliefs. However, there is a concept of distortion that respects a person's idea that determines an outcome is only viewed as distorted if all agents agree (Heyerdahl-Larsen and Walden,2022).
Undersaving or oversaving is also a problem regarding self-control and self-control failure. For example, the U.S. and China have a global account imbalance. This is what triggered the trade war between the two countries. The savings excess in China has caused a decrease in long-term interest rates and housing bubbles. The results of overspending in the U.S. can be easily seen. Decreasing discount rates help to explain how the young tend to undersave while those near retirement age oversave (Kureishi et al., 2021). So what can be done about these situations? Regarding the U. S. and China, it is recommended that restraining housing bubbles and interest rates is the solution, as well as replacing the U.S. dollar with a new world currency (Wan, 2021). Regarding other factors, it is suggested that psychological guidelines are implemented in the Economy to reduce self-control failures such as self-deployed and cognitive intervention (Duckworth et al.,2018).
Future trends
Future trends are essential to determine what direction a topic is progressing. There needs to be research that compares interventions from diverse traditions. The comparability to meta-analyses is another factor to explore, as well as comparisons of efficacy, scalability, and costs of different approaches to lessening self-control failures. Little is known about how interventions complement or substitute each other. More research is needed on how to gain the development of an executive function. Finally, the robustness, adequate size, and cost of interventions in review must be explored (Duckworth et al., 2018).
Studies in household finance could be a future study, and guidelines for restraining housing bubbles and interest rates could be explored(Kureishi et al.,2021; Wan, 2021). In addition, there could be future trading and investment exploration (Uhr et al., 2021). Moreover,guidelines regarding financial education, information sharing, and announcements could be a future exploration(Heyerdahl-Larsen and Walden,2022).
References
Duckworth, A. L., Milkman, K. L., & Laibson, D. (2018). Beyond willpower: Strategies for
reducing failures of self-control. Psychol Sci Public Interest, 19(3), 102-129.
doi:10.1177/1529100618821893
Heyerdahl-Larsen, C., & Walden.(2022).Distortions and efficiency in production economies with
heterogeneous beliefs, The Review of Financial Studies35(4)1775–
1812, https://doi.org/10.1093/rfs/hhab068Links to an external site.
Junmin Wan (2021) US-China trade war: Speculative saving perspective,
The Chinese Economy, 54:2, 107-123, DOI: 10.1080/10971475.2020.1830230Links to an external site.
Kureishi, W., Paule-Paludkiewicz, H., Tsujiyama, H., & Wakabayashi, M. (2021). Time
Preferences over the life cycle and household saving puzzles. Journal of Monetary
Economics, 124, 123-
- doi:10.1016/j.jmoneco.2021.10.004
Uhr, C., Meyer, S., & Hackethal, A. (2021). Smoking hot portfolios? trading behavior,
investment biases, and self-control failure. Journal of Empirical Finance, 63, 73-95.
doi:10.1016/j.jempfin.2021.05.006