Household Finances and the 'Big Five' Personality Traits

By Sarah Brown, K. Taylor. Social Science Research Network, 2014

316 citations recorded by the source corpus.

Using data drawn from the British Household Panel Survey, we analyse the relationship between personality traits and financial decision-making focusing on unsecured debt and financial assets. Personality traits are classified according to the ‘Big Five’ taxonomy: openness to experience, conscientiousness, extraversion, agreeableness and neuroticism. We explore personality traits at the individual level and also within couples, specifically the personality traits of the head of household and personality traits averaged across the couple. We find that certain personality traits such as extraversion are generally significantly associated with household finances in terms of the levels of debt and assets held and the correlation is often relatively large. The results also suggest that the magnitude and statistical significance of the association between personality traits and household finances differs across the various types of debt and assets held in the household portfolio.

Subfields: Accounting, Economics and Econometrics, Finance

View Paper: https://www.semanticscholar.org/paper/fe72ff7c286e836ff5fa789b8f0189a7ada5f2bc

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Citations in the corpus

Psychological characteristics and household savings behavior: The importance of accounting for latent heterogeneity (2018, methodology): “…studies have either divided their samples based on observable attributes such as age, gender or marital status, and then analyzed the resulting subsamples in isolation, or instead utilized regression interaction terms (e.g., Brown and Taylor, 2014; Cho et al., 2014; Nyhus and Webley, 2001).”
The Relationship of Extraversion and Neuroticism with Risk Attitude, Risk Perception, and Return Expectations (2018, background): “Brown and Taylor (2011) analyzed the relationship between household finances and personality traits and found that more extraverted individuals bear more financial risks, as they have a higher level of indebtedness.”
Locus of Control and Savings (2016, background): “…cognitive skills (e.g. Christelis et al., 2010; Grinblatt et al., 2011), risk preferences (see Cesarini et al., 2010, and the references therein), mental health (Bogan & Fertig, 2013), and personality traits (Brown & Taylor, 2011) are all related to the amount of financial assets they hold.”
Personality and Young Adult Financial Distress (2015, background): “Financial management often manifests as specific behaviors, such as paying bills on time, saving money for future inevitabilities such as emergencies and retirement, and avoiding too much debt (S. Brown and Taylor, 2014).”