Personality Traits and Financial Outcomes 
Surveys indicate that about 4.5 percent of US households do not have a bank account, about one-quarter do not own any credit cards, and among credit cardholders, revolving credit card debt (carrying unpaid balances) is common. Using data from the 2021 Survey and Diary of Consumer Payment Choice and the University of Southern California Understanding America Study, this paper looks at whether self-reported personality traits have a significant effect on these financial outcomes when the analysis takes into account consumers’ income, demographics, and financial literacy. Specifically, it studies which if any of the Big Five personality traits—openness to experience, conscientiousness, extroversion, agreeableness, and neuroticism—influence consumers’ decisions to be unbanked, adopt a credit card, or revolve credit card debt.
Key Findings
- When the regression analysis controls for demographic traits and income, credit card adopters who are less conscientious, more open, or more agreeable are significantly more likely to carry unpaid credit card debt.
- A machine learning algorithm confirms that conscientiousness is the major determinant of whether a cardholder will pay off or revolve the debt on their credit card.
- Each of the Big Five personality traits is insignificant in predicting whether a consumer is unbanked or has a credit card when demographic traits and income are taken into account.
Implications
The finding that personality traits can influence credit card revolving has implications for consumer education and interventions designed to address debt, for financial product design and consumer protection, and for investments in noncognitive skills. Future research could study whether personality traits can help predict more troublesome financial outcomes, such as delinquencies or bankruptcies.
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.