Each carries out money spending in different ways, because they have different needs and interests. But a person’s buying habits can tell a lot about his personality, according to researchers. People spend money on certain goods, and this can be used to identify personality traits, to understand how materialistic they are or how prone to self-control.
Study progress
A study published in the journal Psychological Science analyzed more than two million electronic records of expenditures - from credit, debit cards and online transactions - from more than 2,000 volunteers.
“Our results demonstrate for the first time that people can be predicted by their spending,” said study co-author Joe Gladstone of University College London.
Participants also completed a questionnaire, which included questions of measuring materialism, self-control, openness of experience, honesty, extroversion, pleasantness and neuroticism.
Researchers used machine learning techniques to analyze whether the relative costs of participants by category were predictive for particular traits. In general, the correlations between the predictions of the model and assessments of the personal qualities of the participants were modest.
What are the results?
Looking at specific correlations between expense categories and characteristics, researchers found that people who were more open to experience tended to spend more on flights, those who were more extrovert tended to make more purchases of food and drink, those who was more pleasant, donated more to charity, those who were more conscientious, invested more money in savings, and those who were more materialistic spent more on jewelry and less on donations.
Researchers also found that those who reported more self-control spend less on bank fees, and those who value neuroticism higher spend less on mortgage payments.
Application in banking and financial services
The results obtained are clearly applied in the field of banking and financial services, which also creates potential ethical problems. For example, financial services firms can use personality forecasts to identify people with certain traits, such as low levels of self-control, and then target them to different domains, from online advertising to direct mail.