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Perception versus the reality of financial situation: The role of personality traits in the United States

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  • Olamide Olajide
  • Sarah Asebedo
  • Donald Lacombe
  • Todd Little

Abstract

An individual might have a net worth of $10,000 and believe they are in great shape financially, while another individual might have $100,000 and feel otherwise. Could personality explain this disparity between perception and reality of their financial situation? This study answers this research question using data from the 2018 Health and Retirement Study (HRS). Findings from this study show that conscientious and extraverted consumers believe they are doing better than they are. Conversely, consumers who exhibit traits relating to neuroticism, openness to experience, and agreeableness think their financial situation is worse than it is. These findings have implications for consumers, professional advisors, and policymakers.

Suggested Citation

  • Olamide Olajide & Sarah Asebedo & Donald Lacombe & Todd Little, 2023. "Perception versus the reality of financial situation: The role of personality traits in the United States," Journal of Consumer Affairs, Wiley Blackwell, vol. 57(3), pages 1523-1541, July.
    • Handle: RePEc:bla:jconsa:v:57:y:2023:i:3:p:1523-1541
    DOI: 10.1111/joca.12556
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