Money demand with compassion motive within the framework of behavioral economics

Money demand is expressed as a concept with consumer behavior which is closely related in the economic literature. On the other hand, compassion is shown as a motive that is predicted to exist in every human being and even in animals. These informations have revealed the idea that this motive which is closely related to humans, can have an impact on consumer behavior and therefore on money demand. Already in recent years, people's behavior has been examined within the framework of behavioral economics. The primary aim of this thesis is to reveal whether household members money demand with compassion motive and to contribute to the literature by adding the compassion motive to money demand equation. In order to reveal this, individuals who earn income, over the age of 18 and residing in the provinces of Artvin, Giresun, Gümüşhane, Ordu, Rize and Trabzon within the scope of the TR90 subsection were selected as a sample and a survey was conducted within this framework. The survey included questions regarding demand for money and the compassion scale which is currently used in psychology. The survey was conducted between June 2022 and May 2023. 461 samples were used in the study. The analysis consists of two stages. In the first stage, the existence of the compassion motive was quaried in real money demand. At this stage, real money demand was used as the dependent variable, while income, compassion motive, own rate of interest on money and rate of interest on other financial assets were used as independent variables. According to the results of the least squares analysis, income, own rate of interest on money and compassion motive were calculated as significant variables of real money demand. After the decision which is the compassion motive was a variable of real money demand, has been made, the second stage was started. In the second stage, the factors which are affecting money demand due to compassion motive were tried to be revealed by using structural equation modeling. According to the structural equation model which is established at this stage, it has been determined that living standards, economic factors, expenses and purchasing power expectations affect money demand which is motivated with compassion. Within the framework of these results, it is aimed to develop money demand theory by adding compassion motive as a psychological factor to money demand equation. Key Words: Money Demand, Behavioral Economics, Compassion Motive, Least Squares (LS), Structural Equation Model (SEM)