Professor Gets to the Root of Our Money Management Behavior
Ning Tang
Professor Gets to the Root of Our Money Management Behavior
After earning First Class Honors with a degree in actuarial science from the University of Hong Kong, Ning Tang realized that going to graduate school would be what she wanted. “After my internships and job hunting, I realized that I was more interested in expanding my horizons and conducting research on topics that were of interest to me,” said Tang. “That’s when I applied to the Wharton School at the University of Pennsylvania. Luckily, I was accepted.”
After earning both her master’s degree and Ph.D. in applied economics from the Wharton School, Tang chose to focus on the subject of household finance in her research. As it happened, the Fowler College of Business at SDSU had an opening for a professor with her areas of specialization while she was in the process of completing her Ph.D., and Tang came to Southern California for an interview. “Once I visited San Diego, I knew this was the place I wanted to live,” she said. “But more importantly, the finance department at SDSU is among the few departments in the U.S. that offers programs not only in general finance but also in financial planning*, which was a good match with my research interests.”
Good Financial Decisions and Why We Avoid Them
Tang became interested in the field of financial literacy through conversations with
her students and through her research in household finance after joining SDSU. “I
wanted to know what prevented individuals from making good financial decisions and
what we could do to change this,” she said. “Financial literacy is a relatively new
research area that requires knowledge not only of finance, but also psychology, education
and consumer behavior.”
One observation Tang had was lack of awareness of – and the unwillingness to engage in – responsible financial management. “When people are unaware of the importance of managing their personal finances, regardless of income and wealth level, they won’t be motivated to acquire knowledge and skills or to actively manage their money,” she noted. “In addition, I think there are behavioral biases preventing people from practicing efficient financial management – in other words, they know the right thing to do, they just don’t do it. For example, they know they should save many in a 401(k) plan, but they may become overwhelmed by the long list of investment choices and they don’t contribute.”
When it Comes to Money, the Apple Doesn’t Fall Far From the Tree
Tang believes there are several factors besides financial knowledge that can lead
to inefficient financial behavior. For example, her research has indicated that parental influence is a significant element in their children’s
financial behavior. “I’ve found a direct link between parents’ and their children’s
financial management quality because children learn about financial management by
observation and the modeling of their parents’ financial behaviors,” she said. “Parents
who manage their finances responsibly will also provide opportunities for their children
to recognize and develop self-control skills, which leads to responsible financial
behavior as they grow up.”
Her research noted that since parents are the primary socialization agents for their children, most people develop their initial consumer and financial skills by interacting with their parents. Tang and other researchers have suggested that introducing financial literacy programs towards adults/parents along with the traditional educational programs among youngsters might be an effective method of improving financial literacy.
While Tang notes that she thoroughly enjoys the research aspect of her job as an SDSU professor, she also enjoys being able to work with people and to learn from them. “I found that I really like multi-dimensional research such as financial literacy studies because it allows me to build new skills as I work with people from different backgrounds,” she said. “But I also really enjoy teaching as well, since students always bring new ideas and interesting thoughts. I really learn a lot from them!”
