How you spend money may reflect your personality

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Now most people spend money electronically.
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London: It is possible to predict people's personality traits from their spending behaviour, according to a study that collected data from over 2,000 account holders.

Analyses of over two million spending records indicate that when people spend money in certain categories, this can be used to infer certain personality traits, such as how materialistic they are or how much self-control they tend to have.

"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," said Joe Gladstone from the University College London in the UK.

"Our findings demonstrate for the first time that it is possible to predict people's personality from their spending," Gladstone said.

We all spend money on essential goods, such as food and housing, to fulfill basic needs -- but we also spend money in ways that reflect aspects of who we are as individuals.

Gladstone and Columbia Business School researchers Sandra Matz and Alain Lemaire collected data from over 2,000 account holders, resulting in a total of two million spending records from credit cards and bank transactions.

Account holders also completed a brief personality survey that included questions measuring materialism, self-control, and the "Big Five" personality traits of openness to experience, conscientiousness, extraversion, agreeableness, and neuroticism.

Participants' spending data was organised into broad categories -- including supermarkets, furniture stores, insurance policies, online retail stores, and coffee shops.

The study, published in the journal Psychological Science, used a machine-learning technique to analyse whether participants' relative spending across categories was predictive of specific traits.

The correlations between the model predictions and participants' personality trait scores were modest.

However, predictive accuracy varied considerably across different traits, with predictions that were more accurate for the narrow traits (materialism and self-control) than for the broader traits (the Big Five).

Looking at specific correlations between spending categories and traits, the researchers found that people who were more open to experience tended to spend more on flights, those who were more extraverted tended to make more dining and drinking purchases.

Those who were more agreeable donated more to charity, those who were more conscientious put more money into savings, and those who were more materialistic spent more on jewelery and less on donations, researchers said.

They also found that those who reported greater self-control spent less on bank charges and those who rated higher on neuroticism spent less on mortgage payments.

"It didn't matter whether a person was old or young, or whether they had a high or low salary, our predictions were broadly consistent," said Matz.

"The one exception is that people who lived in highly deprived areas were more difficult to predict. One possible explanation may be that deprived areas offer fewer opportunities to spend money in a way that reflects psychological preferences," said Matz.

The findings have clear applications in the banking and financial services industries, which also raises potential ethical challenges, researchers said.

For example, 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, they said.

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