The Influences of Locus of Control, Debt, and Framing on Retirement Contributions

  • Bryan FOLTICE Butler University, Lacy School of Business USA
  • Patrick ILCIN Butler University, Lacy School of Business USA


This study evaluates locus of control, debt, and framing effects as potential drivers of retirement savings decisions. We administer an online survey analyzing how much an individual will save for retirement upon graduating college. The study finds that individuals with an external locus of control contribute significantly less to their retirement savings than individuals with an internal locus of control. Interestingly, this study finds no significant relationship between debt overhang and initial contributions. To measure framing effects, participants were given the choice to change their initial contribution rate after seeing the estimated increased future amount of their account balance based on an annual contribution increase for each 1% of salary (percentage frame group) or $500 (dollar frame group). The survey results show that individuals that were given the percentage frame increase their initial contribution to their retirement account significantly more than the group receiving the dollar frame.


[1] Allais, M. 1953. Le comportement de l'homme rationnel devant le risque: Critique des postulats et axiomes de l'ecole americaine. Econometrica, 21 (4): 503-546. DOI: org/10.2307/1907921
[2] Arling, P., Foltice, B., Kirby, J., and Saajasto, K. 2018. Persistent anchoring to default rates when electing 401(k) contributions, Review of Behavioral Finance, 10 (1): 88-104.
[3] Brandon, E. 2016. How your 401(k) balance stacks up retirement US News. Available at: http://money.usnews. com/money/retirement/articles/2016-06-13/how-your-401-k-balance-stacks-up (accessed October 28, 2016).
[4] Brown, J., Kapteyn, A., and Mitchell, O. 2011. Framing and claiming: How information-framing affects expected social security claiming behavior. Working Papers - Financial Institutions Center at The Wharton School, 74-120 pp. Available at:
[5] Caputo, R.K. 2012. Patterns and predictors of debt: A panel study, 1985-2008, The Journal of Sociology & Social Welfare, 39 (2): 7-16.
[6] Card, D., and Ransom, M. 2011. Pension plan characteristics and framing effects in employee savings behavior. Review of Economics & Statistics, 93(1): 228-243. Available at:
[7] Carnevale, A.P., Cheah, B., and Hanson, A.R. 2015. The economic value of college majors. Georgetown University, Center on Education and the Workforce, McCourt School of Public Policy. Available at: (accessed March 23, 2018).
[8] Clark, R., Lusardi, A., and Mitchell, O.S. 2016. Employee financial literacy and retirement plan behavior: A case study. Forthcoming Economic Inquiry, 55: 248-259., Available at:
[9] Cobb-Clark, D.A., Kassenboehmer, S.C., and Sinning, M.G. 2016. Locus of control and savings. Journal of Banking and Finance, 73: 113-130.
[10] Dolvin, S.D., and Templeton, W.K. 2006. Financial education and asset allocation. Financial Services Review, 15: 133-149.
[11] Fernandes, D., Lynch Jr., J.G., and Netemeyer, R.G. 2014. Financial literacy, financial education, and downstream financial behaviors. Management Science, 60(8): 1861-1883.
[12] Fournier, G. 2016. Locus of control. Psychology Central Encyclopedia. Available at: encyclopedia/locus-of-control/ (accessed on November 26, 2016).
[13] Friedman, Z. 2018. Student loan debt statistics in 2018: A $1.5 trillion crisis. Available at: (accessed Oct.1, 2018).
[14] Gürol, Y., and Atsan, N. 2006. Entrepreneurial characteristics amongst university students: Some insights for entrepreneurship education and training in Turkey. Education & Training, 48(1): 25-38.
[15] Kasilingam, R., and Sudha, S. 2010. Influence of locus of control on investment behavior of individual investor. Vidwat: The Indian Journal of Management, 3(1): 17-25.
[16] Koposko, J.L., Hershey, D.A., Bojórquez, M.I., and Pérez, A.E. 2016. College student attitudes toward retirement planning: The case of Mexico and the United States. Journal of Personal Finance, 15(2): 52-67.
[17] Limerick, L., and Peltier, J.W. 2014. The effects of self-control failures on risky credit card usage. Marketing Management Journal, 24(2): 149-161.
[18] Mayer, R.N., Zick, C.D., and Glaittli, M. 2011. Public awareness of retirement planning rules of thumb. Journal of Personal Finance, 10(1): 12-35.
[19] Minicozzi, A. 2005. The short term effect of educational debt on job decisions. Economics of Education Review, 24(4): 417-430.
[20] Moore, D.L. 2003. Survey of financial literacy in Washington State: Knowledge, behavior, attitudes, and experiences. Available at: 242_Survey_of_Financial_Literacy_in_Washington_State_Knowledge_behavior_Attitudes_and_Experiences
[21] Peltier, J.W., Pomirleanu, N., Endres, M., and Markos, E. 2013. Psycho-social factors impacting credit acquisition and use by college students. Journal of Financial Services Marketing, 18(4): 271-284.
[22] Perry, V.G., and Morris, M.D. 2005. Who’s in control? The role of self-perception, knowledge, and income in explaining consumer financial behavior. The Journal of Consumer Affairs, 39(2): 299-313.
[23] Popper, M., Amit, K., Gal, R., Mishkal-Sinai, M., and Lisak, A. 2004. The capacity to lead: Major psychological differences between leaders and non-leaders. Military Psychology, 16(4): 245-263.
[24] Poppick, S. 2015. Here's what the average grad makes right out of college. Available at: (accessed March 20, 2018).
[25] Reimers, S. 2009. A paycheck half-empty or half-full? Framing, fairness and progressive taxation. Judgment and Decision Making, 4(6): 461-466.
[26] Rothstein, J., and Rouse, C.E. 2011. Constrained after college: Student loans and early-career occupational choices. Journal of Public Economics, 95(1-2): 149-163.
[27] Rotter, J.B. 1966. Generalized expectancies for internal versus external control of reinforcement. Psychological Monographs. General and Applied, 80(1): 1-28.
[28] Shaw, K., and Waite, K. 2015. Exploring the pension 'X factor' for generation Y men. Journal of Financial Services Marketing, 20(2): 122-132.
[29] Tversky, A., and Kahneman, D. 1981. The framing of decisions and the psychology of choice. Science, 211 (4481): 453-458.
[30] Twenge, J.M., and Campbell, S.M. 2008. Generational differences in psychological traits and their impact on the workplace. Journal of Managerial Psychology, 23 (8): 862-877.
[31] Wang, M., Chen, H., and Wang, L. 2008. Locus of control and home mortgage loan behavior. International Journal of Psychology, 43(2): 125-129.
[32] Wong, A., and Carducci, B. 2016. Do sensation seeking, control orientation, ambiguity, and dishonesty traits affect financial risk tolerance? Managerial Finance, 42(1): 34-41.
[33] Zhang, L. 2013. Effects of college educational debt on graduate school attendance and early career and lifestyle choices. Education Economics, 21(2): 154-175.
*** Common Cents Lab Annual Report 2016 (Rep.). Retrieved May 7, 2017, from Center for Advanced Hindsight Available at:
How to Cite
FOLTICE, Bryan; ILCIN, Patrick. The Influences of Locus of Control, Debt, and Framing on Retirement Contributions. Journal of Advanced Studies in Finance, [S.l.], v. 10, n. 1, p. 34-44, aug. 2019. ISSN 2068-8393. Available at: <>. Date accessed: 23 jan. 2022. doi:
Journal of Advanced Studies in Finance