Evaluating the impact of hedonism on investment choices in India

Abstract

Purpose

The purpose of this paper is to find the effect of the hedonism value on the investment preference in India.

Design/methodology/approach

Based on the literature review, a measurement model is developed to measure hedonism. Further, the effect of hedonism on investment choices of an individual and the impact of age, gender and income level on investment choices and on hedonism are also measured through a structural equation model (SEM).

Findings

The study finds that the measurement model is reliable, and all five items, that is an exciting life, happiness, pleasure, social recognition and a comfortable life, are an appropriate measure of hedonism. The study finds that hedonists prefer to invest in stock market-related instruments and real estate. The study also ascertains that age and income affect the hedonism value negatively. The findings also indicate that women prefer to invest in fixed income instruments and men prefer to invest in stock market-related instruments. As people grow in age, they prefer to invest in fixed-income instruments and gold as a hedge, thus avoiding risky investments.

Research limitations/implications

The study does not include education and financial literacy of individuals in the model, rather controls these factors by selecting a sample where the minimum educational qualification of the respondent is graduation.

Practical implications

It is assumed that the values that drive an individual have the potential to influence his/her investment choices. Therefore, the study advises the firms offering investment services to their clients to ensure that apart from studying the demographic and risk profile of individuals, they also assess their value system. This can help them target their customers more precisely and serve them better.

Originality/value

The study is perhaps the first attempt to find the effect of personal values (specifically hedonism) on investment choices made by individuals, through the development of an SEM.

Citation

Singla, H.K. and Hiray, A. (2019), "Evaluating the impact of hedonism on investment choices in India", Managerial Finance, Vol. 45 No. 12, pp. 1526-1541. https://doi.org/10.1108/MF-07-2019-0324