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Personality Traits and Financial Outcomes

Author

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  • Claire Greene
  • Oz Shy
  • Joanna Stavins

Abstract

The Big Five personality traits—openness to experience, conscientiousness, extroversion, agreeableness, and neuroticism—are widely used in understanding human behavior. Using data collected from a survey and diary of consumer payment choice, we investigate how the Big Five traits affect three financial outcomes: being unbanked, holding a credit card, and carrying credit card debt. Although each personality trait is correlated with each of the financial outcomes we examine, they mostly become statistically insignificant when we control for demographics and income in regressions. Carrying credit card debt (revolving), however, is significantly affected by conscientiousness, openness, and agreeableness: Credit card adopters who are less conscientious, more open to experiences, or more agreeable are significantly more likely to revolve credit card debt. A machine learning algorithm confirms that conscientiousness is the major factor separating revolvers from other credit cardholders.

Suggested Citation

  • Claire Greene & Oz Shy & Joanna Stavins, 2023. "Personality Traits and Financial Outcomes," Working Papers 23-4, Federal Reserve Bank of Boston.
    • Handle: RePEc:fip:fedbwp:96113
    DOI: 10.29412/res.wp.2023.04
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    References listed on IDEAS

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    7. Arvid O. I. Hoffmann & Leonora Risse, 2020. "Do good things come in pairs? How personality traits help explain individuals' simultaneous pursuit of a healthy lifestyle and financially responsible behavior," Journal of Consumer Affairs, Wiley Blackwell, vol. 54(3), pages 1082-1120, September.
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    More about this item

    Keywords

    credit card debt; consumer payments; personality traits; financial behavior; unbanked;
    All these keywords.

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System

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