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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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    References listed on IDEAS

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    1. Sarah Brown & Gaia Garino & Karl Taylor, 2013. "Household Debt And Attitudes Toward Risk," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 59(2), pages 283-304, June.
    2. Sarah Brown & Karl Taylor, 2008. "Household debt and financial assets: evidence from Germany, Great Britain and the USA," Journal of the Royal Statistical Society Series A, Royal Statistical Society, vol. 171(3), pages 615-643, June.
    3. à lvarez Espiño, Marcos & Fernández López, Sara & Rey Ares, Lucía, 2023. "Profile of financially fragile households: Comparative analysis of Galicia and Spain," Revista Galega de Economía, University of Santiago de Compostela. Faculty of Economics and Business., vol. 32(1), pages 1-36.
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    Keywords

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    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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