If You’re an Extrovert, Here’s How You’re Wasting Your Money
Outgoing? Life of the party? Big spender? Yep, your personality can influence your money habits, says science.
tanja vashchuk/ShutterstockOver-spending when you don’t have a lot of disposable income is one thing money experts never recommend, and yet: Most of us own more stuff than we use. In his book Happy Money: The Science of Smarter Spending, Michael I. Norton, professor of business administration in the marketing unit of Harvard Business School, says spending money gives us instant gratification. Now, new research, recently published in the journal Psychological Science, suggests your personality type can dictate your spending habits.
Blaine Landis and Joe J. Gladstone from the School of Management, University College London, collected survey responses from 718 low-income customers of a UK bank, providing information about their age, employment status, income, savings, debt, and cash withdrawals. They also agreed to have their responses linked to their actual bank account data from the previous 12 months.
Participants also completed a brief, validated measure of five core personality traits: Openness to experience, conscientiousness, extraversion, agreeableness, and neuroticism. The researchers found that people who register as extroverts spent more on status items, such as foreign air travel, electronics, and art institutions, than introverts. (Interestingly, at high income levels, the difference between introverts and extroverts was less pronounced.)
“Our findings suggest that extroverts compensate for having low income by spending more on items and experiences that reflect higher status,” says Landis, first author on the research. “In other words, individuals’ spending patterns may reflect personality differences in how they respond to having low income.” Landis added that it was no surprise that people who rate high on the personality trait extraversion—those who are sociable and assertive—would spend more of their money on status items compared with their less extraverted peers.
According to Norton, purchasing things for ourselves can make us happier in the moment, but spending money on experiences has a much greater correlation with overall happiness. Because experiences are usually shared with people, they make us happier than, well, a bunch of stuff. So making choices to spend money in ways that allow for more time with other people, even strangers, can lead to a better sense of well-being. And that applies whether we’re low income or high income, extravert or introvert.
(Has science found an exception to the “money can’t buy happiness” rule?)