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Personality Traits and Household Consumption Choices

Author

Listed:
  • Mangiavacchi Lucia

    (Department of Political Sciences, Università degli Studi di Perugia, Perugia, Italy)

  • Piccoli Luca

    (IZA, Institute of Labor Studies, Bonn, Germany)

  • Rapallini Chiara

    (Department of Economics and Management, Università degli Studi di Firenze, Firenze, Italy)

Abstract

This study examines the role personality traits play in influencing consumption decisions for both individuals and households by means of a complete system of Engel curves. Estimations are performed on the German Socio-Economic Panel (SOEP) using the following four different samples: single men, single women, childless couples and couples with children. Personality traits are found to moderately improve the general goodness of fit of the model, reducing the RMSE on average by 2.8%. This is the result of some traits strongly contributing to explaining specific consumption categories, such as Mental Openness contributing substantially to explaining expenditure in education and culture, and several non-significant personality trait-consumption category associations. Robustness analysis suggests that the effect is fairly stable across age groups within the same household type and that the effects of personality traits on consumption choices are independent of education level.

Suggested Citation

  • Mangiavacchi Lucia & Piccoli Luca & Rapallini Chiara, 2021. "Personality Traits and Household Consumption Choices," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 21(2), pages 433-468, April.
    • Handle: RePEc:bpj:bejeap:v:21:y:2021:i:2:p:433-468:n:4
    DOI: 10.1515/bejeap-2020-0189
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    Cited by:

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    2. Tran Nguyen Van, 2022. "Understanding Household Consumption Behaviour: What do we Learn from a Developing Country?," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 22(4), pages 801-858, October.
    3. Nemeczek, Fabian & Radermacher, Jan, 2022. "Personality-augmented MPC: Linking survey and transaction data to explain MPC heterogeneity by Big Five personality traits," SAFE Working Paper Series 348, Leibniz Institute for Financial Research SAFE.
    4. Ibrahim Mohammed & Wassiuw Abdul Rahaman & Priscilla Twumasi Baffour, 2020. "The role of personality traits in predicting days lost due to illness: evidence from the World Bank’s Skills toward Employment and Productivity survey," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 67(2), pages 163-188, June.
    5. Rice, Nigel & Robone, Silvana, 2022. "The effects of health shocks on risk preferences: Do personality traits matter?," Journal of Economic Behavior & Organization, Elsevier, vol. 204(C), pages 356-371.

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    More about this item

    Keywords

    Big Five personality traits; consumption choices; preferences;
    All these keywords.

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • J12 - Labor and Demographic Economics - - Demographic Economics - - - Marriage; Marital Dissolution; Family Structure
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making

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