Study finds certain traits exist regardless of income or age
How does your personality affect your spending habits and how can those spending habits reveal more about who you are?
The surge in electronic payments over recent years has enabled financial institutions and researchers to discover a lot more about our spending habits than was previously possible.
A recent study conducted by University College London has identified key traits that provide insights into spending.
"Now that most people spend their money electronically - with billions of payment cards in circulation worldwide - we can study these spending patterns at scale like never before," says Joe Gladstone of University College London, who co-led the research. "Our findings demonstrate for the first time that it is possible to predict people's personality from their spending."
While we all spend on essentials such as food, clothing, and shelter, the study looked at spending data from more than 2,000 account holders and more than 2 million spending records, accompanied by brief personality survey results from account holders.
This personality information included questions on self-control, materialism, and the "Big Five" personality traits of openness to experience, conscientiousness, extraversion, agreeableness, and neuroticism.
They found that those who were more open to experience spend more on flights, extraverts favour dining and drinking purchases, the ‘agreeable’ respondents would give more to charity, the conscientious are more likely to save, and the more materialistic spend more on jewellery.
Results were not affected significantly by age or income although those in deprived areas were more difficult to predict.
Financial services implications
While the study may be useful to marketeers, the authors also say it has implications for the banking and financial services sector.
Financial services firms could use personality predictions to identify individuals with certain traits, such as low self-control, and then target those individuals across a variety of domains, from online advertising to direct mail, the study suggests.
This, they say, raises ethical questions.
"As personality predictions become more accurate and ubiquitous, and as behavior is recorded digitally at an increasing scale, there is an urgent need for policymakers to ensure that individuals (and societies) are protected against potential abuse of such technologies," said Gladstone, and co-authors Sandra Matz and Alain Lemaire from Columbia Business School.
Your Spending Data May Reveal Aspects of Your Personality https://t.co/d55cUdFr2R @JoeJGladstone pic.twitter.com/NUnwVGB9vb— APS (@PsychScience) July 19, 2019