Personality Traits and Financial Outcomes

Claire Greene, Oz Shy and Joanna Stavins

No 23-4, Working Papers from Federal Reserve Bank of Boston

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.

Keywords: credit card debt; consumer payments; personality traits; financial behavior; unbanked (search for similar items in EconPapers)
JEL-codes: D12 D14 E42 (search for similar items in EconPapers)
Pages: 31
Date: 2023-03-01
New Economics Papers: this item is included in nep-big, nep-neu and nep-pay
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DOI: 10.29412/res.wp.2023.04

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