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Household finances and the 'Big Five' personality traits

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  • Sarah Brown

    ()
    (Department of Economics, The University of Sheffield)

  • Karl Taylor

    ()
    (Department of Economics, The University of Sheffield)

Abstract

We explore the relationship between household finances and personality traits from an empirical perspective. Specifically, using individual level data drawn from the British Household Panel Survey, we analyse the influence of personality traits on financial decision-making at the individual level focusing on decisions regarding unsecured debt acquisition and financial assets. Personality traits are classified according to the ‘Big Five’ taxonomy: openness to experience, conscientiousness, extraversion, agreeableness and neuroticism. We find that certain personality traits such as extraversion and openness to experience exert relatively large influences on household finances in terms of the levels of debt and assets held. In contrast, personality traits such as conscientiousness and neuroticism appear to be unimportant in influencing levels of unsecured debt and financial asset holding. Our findings also suggest that personality traits have different effects across the various types of debt and assets held. For example, openness to experience does not appear to influence the probability of having national savings but is found to increase the probability of holding stocks and shares, a relatively risky financial asset.

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File URL: http://www.shef.ac.uk/economics/research/serps/articles/2011_025.html
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Bibliographic Info

Paper provided by The University of Sheffield, Department of Economics in its series Working Papers with number 2011025.

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Length: 32 pages
Date of creation: Dec 2011
Date of revision:
Handle: RePEc:shf:wpaper:2011025

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Keywords: big five personality traits; financial assets; unsecured debt;

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  1. Cobb-Clark, Deborah A. & Schurer, Stefanie, 2012. "The stability of big-five personality traits," Economics Letters, Elsevier, vol. 115(1), pages 11-15.
  2. Roger Koenker & Kevin F. Hallock, 2001. "Quantile Regression," Journal of Economic Perspectives, American Economic Association, vol. 15(4), pages 143-156, Fall.
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  8. Heineck, Guido & Anger, Silke, 2010. "The Returns to Cognitive Abilities and Personality Traits in Germany," EconStor Open Access Articles, ZBW - German National Library of Economics, pages 535-546.
  9. repec:ese:iserwp:2009-22 is not listed on IDEAS
  10. Sarah Brown & Karl Taylor & Gaia Garino & Stephen Wheatley Price, 2003. "Debt and financial expectations: an individual and household level analysis," Discussion Papers in Economics 03/5, Department of Economics, University of Leicester, revised Feb 2004.
  11. Hochguertel, Stefan & Alessie, Rob & van Soest, Arthur, 1997. " Saving Accounts versus Stocks and Bonds in Household Portfolio Allocation," Scandinavian Journal of Economics, Wiley Blackwell, vol. 99(1), pages 81-97, March.
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  14. Parker,Simon C., 2009. "The Economics of Entrepreneurship," Cambridge Books, Cambridge University Press, number 9780521899604, October.
  15. Reint Gropp & John Karl Scholz & Michelle White, 1996. "Personal Bankruptcy and Credit Supply and Demand," NBER Working Papers 5653, National Bureau of Economic Research, Inc.
  16. Sarah Brown & Gaia Garino & Karl Taylor, 2005. "Mortgages and Financial Expectations: A Household Level Analysis," Discussion Papers in Economics 05/9, Department of Economics, University of Leicester, revised Dec 2006.
  17. Carol Bertaut & Martha Starr-McCluer, 2000. "Household portfolios in the United States," Finance and Economics Discussion Series 2000-26, Board of Governors of the Federal Reserve System (U.S.).
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Cited by:
  1. Deborah A. Cobb-Clark & Sonja C. Kassenboehmer & Mathias G. Sinning, 2013. "Locus of Control and Savings," Melbourne Institute Working Paper Series wp2013n42, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.

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