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The Influence of Personality Traits on Household Financial Decisions: Evidence from 31 European Countries

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  • Lobão, Júlio
  • Isam Ashqar, Rashed

Abstract

Household financial decision-making is a complex process influenced by various factors, including personality traits. This study examines the impact of these on household finance in 31 European countries, utilizing the European Union Statistics on Income and Living Conditions (EU-SILC) dataset from Eurostat. We have employed a logistic regression analysis to investigate the relationship between personality traits and three key dimensions of household finance: the likelihood of holding secured debts, the probability of experiencing financial distress, and the state of financial well-being. Our findings have revealed that high levels of neuroticism and extraversion are linked to a greater likelihood of financial distress, whereas low levels of either of them are associated with a higher probability of holding a mortgage. This study highlights the significance of incorporating personality traits into the analysis of household financial decision-making and provides valuable insights into the determinants of household finance in Europe.

Suggested Citation

  • Lobão, Júlio & Isam Ashqar, Rashed, 2025. "The Influence of Personality Traits on Household Financial Decisions: Evidence from 31 European Countries," Revista Galega de Economía, University of Santiago de Compostela. Faculty of Economics and Business., vol. 34(1), pages 1-22.
    • Handle: RePEc:sdo:regaec:v:34:y:2025:i:1_2
    DOI: 10.15304/rge.34.1.10116
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    More about this item

    Keywords

    Personality traits; Household finance; Financial distress; Financial well-being; Secured debts; Mortgage; Neuroticism; Extraversion;
    All these keywords.

    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G40 - Financial Economics - - Behavioral Finance - - - General
    • G50 - Financial Economics - - Household Finance - - - General
    • G51 - Financial Economics - - Household Finance - - - Household Savings, Borrowing, Debt, and Wealth

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