Challenging the Life Cycle Hypothesis: Behavioural Biases of Generation Z in the Digital Era: A Systematic Literature Review
DOI:
https://doi.org/10.47747/fmiic.v1i3.3548Abstract
The Life Cycle Hypothesis (LCH) predicts that rational individuals accumulate and decumulate wealth smoothly across their lifespan. Generation Z (born 1997–2012), shaped by digital ecosystems and algorithmic social media, presents a fundamental challenge to this framework. This study conducts a Systematic Literature Review employing a BERTopic computational pipeline to analyse 184 Scopus articles (2018–2026) across five thematic clusters, spanning 127 journals and 2,108 citations. The synthesis demonstrates that Generation Z systematically violates LCH's rationality, optimisation, and consumption-smoothing axioms through cognitive biases, FOMO-driven impulse consumption, platform-displaced saving, and a digital financial literacy paradox. In response, this study proposes the Digital Behavioural Life Cycle Hypothesis (DBLCH), integrating four digitally-specific mechanisms into a revised lifecycle framework with direct implications for financial regulation, platform design, and education policy in emerging markets.
References
Abdrabbo, T., Omeish, F., Kokash, F., Alghizzawi, M., & Alfaiza, S. A. (2025). The impact of scarcity and uniqueness on luxury products purchasing intention moderated by FoMO and social comparison. Discover Sustainability, 6(1), 857. https://doi.org/10.1007/s43621-025-01830-5
Afthanorhan, A., Mamun, A. A., Zainol, N. R., Foziah, H., & Awang, Z. (2020). Framing the Retirement Planning Behavior Model towards Sustainable Wellbeing among Youth: The Moderating Effect of Public Profiles. Sustainability, 12(21), 8879. https://doi.org/10.3390/su12218879
Ahmad, N. L., Mohamad Fazil, N. F., & Yusof, R. (2025). The Relationship between Financial Literacy and Entrepreneurship Spirit with Mediating Effect of Personal Financial Management. Pertanika Journal of Social Sciences and Humanities, 33(2). https://doi.org/10.47836/pjssh.33.2.17
Ahmad, U., Van Keulen, M., Briassouli, A., & Saad, M. (2025). Cognitive biases, Robo advisor and investment decision psychology: An investor’s perspective from New York stock exchange. Acta Psychologica, 256, 105048. https://doi.org/10.1016/j.actpsy.2025.105048
Ammer, M. A., & Aldhyani, T. H. H. (2022). An Investigation into the Determinants of Investment Awareness: Evidence from the Young Saudi Generation. Sustainability, 14(20), 13454. https://doi.org/10.3390/su142013454
Anwar, M. M. (2025). How digital financial literacy and social media usage build saving behavior among Generation Z. Asia-Pacific Journal of Business Administration. https://doi.org/10.1108/APJBA-04-2025-0329
Bhatia, A., Chandani, A., & Chhateja, J. (2020). Robo advisory and its potential in addressing the behavioral biases of investors—A qualitative study in Indian context. Journal of Behavioral and Experimental Finance, 25, 100281. https://doi.org/10.1016/j.jbef.2020.100281
Bihari, A., Dash, M., Muduli, K., Kumar, A., Mulat-Weldemeskel, E., & Luthra, S. (2025). Does cognitive biased knowledge influence investor decisions? An empirical investigation using machine learning and artificial neural network. VINE Journal of Information and Knowledge Management Systems, 55(2), 445–469. https://doi.org/10.1108/VJIKMS-08-2022-0253
Chhillar, N., & Arora, S. (2022). Personal Financial Management Behavior Using Digital Platforms And Its Domains. Journal of Financial Management, Markets and Institutions, 10(02), 2250009. https://doi.org/10.1142/S2282717X22500098
Dimock, M. 2019. Defining generations: Where Millennials end and Generation Z begins. Pew Research Center. https://www.pewresearch.org
García Mata, O. (2021). The effect of financial literacy and gender on retirement planning among young adults. International Journal of Bank Marketing, 39(7), 1068–1090. https://doi.org/10.1108/IJBM-10-2020-0518
Grootendorst, M. (2022). BERTopic: Neural topic modeling with a class-based TF-IDF procedure (Version 1). arXiv. https://doi.org/10.48550/ARXIV.2203.05794
Gupta, S., & Shrivastava, M. (2022). Herding and loss aversion in stock markets: Mediating role of fear of missing out (FOMO) in retail investors. International Journal of Emerging Markets, 17(7), 1720–1737. https://doi.org/10.1108/IJOEM-08-2020-0933
Hii, I. S. H., Ho, J. M., Zhong, Y., & Li, X. (2025). Savings in the digital age: Can Internet wealth management services enhance savings behaviour among Chinese Gen Z? Managerial Finance, 51(4), 631–646. https://doi.org/10.1108/MF-03-2024-0231
Kaur, M., Jain, J., & Sood, K. (2024). “All are investing in Crypto, I fear of being missed out”: Examining the influence of herding, loss aversion, and overconfidence in the cryptocurrency market with the mediating effect of FOMO. Quality & Quantity, 58(3), 2237–2263. https://doi.org/10.1007/s11135-023-01739-z
Khatik, S., Joshi, R., & Kumar Adwani, V. (2021). Inferring The Role Of Social Media On Gen Z’s Investments Decisions. Journal Of Content Community And Communication, 14(8), 309–317. https://doi.org/10.31620/JCCC.12.21/24
Korankye, T. (2024). Student loan debt in retirement: Identifying the correlates and implications for policy, practice and research. Managerial Finance, 50(4), 791–810. https://doi.org/10.1108/MF-11-2022-0543
Letkiewicz, J. C., & Heckman, S. J. (2018). Homeownership among Young Americans: A Look at Student Loan Debt and Behavioral Factors. Journal of Consumer Affairs, 52(1), 88–114. https://doi.org/10.1111/joca.12143
Lučić, A., Barbić, D., & Uzelac, M. (2020). The Role of Financial Education in Adolescent Consumers’ Financial Knowledge Enhancement. Market-Tržište, 32(SI), 115–130. https://doi.org/10.22598/mt/2020.32.spec-issue.115
Mamidala, V., Kumari, P., & Singh, D. (2024). Should I invest or not? Investigating the role of biases and status quo. Qualitative Research in Financial Markets, 16(3), 423–447. https://doi.org/10.1108/QRFM-12-2022-0198
Modigliani, F. 1966. The life cycle hypothesis of saving, the demand for wealth and the supply of capital. Social Research, 33(2): 160-217.
Modigliani, F. and Brumberg, R. 1954. Utility analysis and the consumption function: An interpretation of cross-section data. In Kurihara, K.K. (ed.), Post-Keynesian Economics. New Brunswick: Rutgers University Press, pp. 388-436.
Martaningrat, N. W. S., & Kurniawan, Y. (2024). The Impact of Financial Influencers, Social Influencers, and FOMO Economy on the Decision-Making of Investment on Millennial Generation and Gen Z of Indonesia. Journal of Ecohumanism, 3(3), 1319–1335. https://doi.org/10.62754/joe.v3i3.3604
Nabayinda, J., Kizito, S., Nattabi, J., Nabunya, P., & M. Ssewamala, F. (2026). Gendered Impact of Economic Empowerment Interventions on Savings Behaviors Among HIV-Orphaned Adolescents in Uganda. Global Social Welfare. https://doi.org/10.1007/s40609-026-00436-7
Nair, P. S., Shiva, A., Yadav, N., & Tandon, P. (2023). Determinants of mobile apps adoption by retail investors for online trading in emerging financial markets. Benchmarking: An International Journal, 30(5), 1623–1648. https://doi.org/10.1108/BIJ-01-2022-0019
Nguyen, V. H., Nguyen, T. S., & Nguyen, T. H. T. (2024). The impact of online reviews and eWOM on impulse buying tendency: A study of Vietnamese Gen Z consumers. J. for International Business and Entrepreneurship Development, 16(1), 10063704. https://doi.org/10.1504/JIBED.2024.10063704
Nugraha, Y. D., Suliyanto, S., Permana, R. M. T., & Hadiarti, D. (2024). Impulsive purchase behaviour of Z generation of Muslim women on TikTok shop: The application of S-O-R framework. Journal of Islamic Marketing, 15(2). https://doi.org/10.1108/JIMA-06-2022-0182
Page, M. J., McKenzie, J. E., Bossuyt, P. M., Boutron, I., Hoffmann, T. C., Mulrow, C. D., Shamseer, L., Tetzlaff, J. M., Akl, E. A., Brennan, S. E., Chou, R., Glanville, J., Grimshaw, J. M., Hróbjartsson, A., Lalu, M. M., Li, T., Loder, E. W., Mayo-Wilson, E., McDonald, S., … Moher, D. (2021). The PRISMA 2020 statement: An updated guideline for reporting systematic reviews. BMJ, n71. https://doi.org/10.1136/bmj.n71
Park, H., & Martin, W. (2022). Effects of risk tolerance, financial literacy, and financial status on retirement planning. Journal of Financial Services Marketing, 27(3), 167–176. https://doi.org/10.1057/s41264-021-00123-y
Parveen, S., Satti, Z. W., Subhan, Q. A., & Jamil, S. (2020). Exploring market overreaction, investors’ sentiments and investment decisions in an emerging stock market. Borsa Istanbul Review, 20(3), 224–235. https://doi.org/10.1016/j.bir.2020.02.002
Przybylski, A.K., Murayama, K., DeHaan, C.R. and Gladwell, V. 2013. Motivational, emotional, and behavioral correlates of fear of missing out. Computers in Human Behavior, 29(4): 1841-1848.
Putra., K. W. S., Pramana, I. B. G. A. Y., Pradhana, I. P. D., & Ramadiansyah, S. A. (2025). The Impact of Celebrity Endorsement: FOMO and FOPO on Consumer Decision-Making in the Digital Age. Jurnal Komunikasi: Malaysian Journal of Communication, 41(4), 59–74. https://doi.org/10.17576/JKMJC-2025-4104-04
Putra, M. D., Rofiki, A., Yudha, A. T. R. C., Riyadi, I., & Fadilla, S. (2025). When the Sacred Meets the Market: The Commodification of Islamic Housing in Lima Puluh Kota, West Sumatra. Journal of Islamic Law, 6(1), 135–154. Scopus. https://doi.org/10.24260/jil.v6i1.3539
Raj, G. (2026). Biases and investment decision: An analysis of demographics using PLS-MGA. International Journal of Accounting & Information Management, 34(1), 123–144. https://doi.org/10.1108/IJAIM-08-2024-0282
Ramli, Z., Anak Nyirop, H. B., Md Sum, S., & Awang, A. H. (2022). The Impact of Financial Shock, Behavior, and Knowledge on the Financial Fragility of Single Youth. Sustainability, 14(8), 4836. https://doi.org/10.3390/su14084836
Saavedra, C. M. C., & Bautista, R. A. (2020). Are you “in” or are you “out”?: Impact of FoMO (Fear of Missing Out) on Generation Z’s Masstige- brand Apparel Consumption. Asia-Pacific Social Science Review, 20(2). https://doi.org/10.59588/2350-8329.1305
Senduk, F. F. W., Djatmika, E. T., Wahyono, H., Churiyah, M., & Arjanto, P. (2025). A Phenomenological Perspective on Financial Education: The Lived Experiences of High School Students. Educational Process International Journal, 17(1). https://doi.org/10.22521/edupij.2025.17.391
Seth, H., Talwar, S., Bhatia, A., Saxena, A., & Dhir, A. (2020). Consumer resistance and inertia of retail investors: Development of the resistance adoption inertia continuance (RAIC) framework. Journal of Retailing and Consumer Services, 55, 102071. https://doi.org/10.1016/j.jretconser.2020.102071
Shefrin, H.M. and Thaler, R.H. 1988. The behavioral life-cycle hypothesis. Journal of Political Economy, 96(6): 1212-1245.
Shiva, A., Narula, S., & Shahi, shahi k. (2020). What Drives Retail Investors’ Investment Decisions? Evidencefrom No Mobile Phone Phobia (Nomophobia) And Investor fear Of Missing Out (I – Fomo). Journal of Content, Community and Communication, 11(10), 2–20. https://doi.org/10.31620/JCCC.06.20/02
Singh, D., Malik, G., & Jha, A. (2024). Overconfidence bias among retail investors: A systematic review and future research directions. Investment Management and Financial Innovations, 21(1), 302–316. https://doi.org/10.21511/imfi.21(1).2024.23
Singh, S., & Chakraborty, A. (2025). The social ledger: Qualitatively decoding interaction-driven investment decisions among Indian investors and fund managers. Qualitative Research in Financial Markets, 17(4), 830–848. https://doi.org/10.1108/QRFM-08-2023-0190
Thi, H. P., Hoang, Y. P., Cao, T. P., Le, Q. A., Nguyen, M. H., Nguyen, C. D. K., & Dang, L. N. N. (2025). Which factors drive socially responsible investment (SRI) intentions among Generation Z in emerging markets? The evidence from Vietnam. International Journal of Ethics and Systems.
Thu, H. T. T., Khanh, Q. N., Khanh, V. N., Phuong, M. D., & Trung, D. H. (2025). The impact of financial literacy on financial behaviors: The case of university students in Hanoi, Vietnam. Humanities and Social Sciences Letters, 13(3), 1037–1052. https://doi.org/10.18488/73.v13i3.4380
Worasatepongsa, P., & Deesukanan, C. (2022). The Structural Equation Modelling Of Factors Affecting Savings And Investment Behaviors Of Generations Z In Thailand. 14(1).
Zaimovic, A., Torlakovic, A., Arnaut-Berilo, A., Zaimovic, T., Dedovic, L., & Nuhic Meskovic, M. (2023). Mapping Financial Literacy: A Systematic Literature Review of Determinants and Recent Trends. Sustainability, 15(12), 9358. https://doi.org/10.3390/su15129358
