Personality Traits, Consumer Home Value, and Mortgage Debt

Abstract

Research on residential preferences has consistently orbited around their been correlation with economic and social factors. This study builds on the existing literature by investigating the personality characteristics that shape residential behavior. The specific objective is to examine the Big Five personality traits (OCEAN)—openness, conscientiousness, extraversion, agreeableness, and neuroticism—and their relationship with the value of individuals’ primary residences and mortgage debt using data collected from the Health and Retirement Study. Regression models are estimated to examine the associations between the OCEAN personality traits and home value and mortgage debt. The findings reveal the following associations: openness and conscientiousness are associated positively, and agreeableness is associated negatively, with larger home values; whereas openness and agreeableness are associated positively, and conscientiousness and neuroticism are associated negatively, with larger mortgage debts.

Towards an integrated debiasing framework for consumer financial decisions: A reflection on debiasing research

“…Debiasing investors by helping them determine what is salient could help mitigate biases such as the sunk-cost fallacy, disposition effect and anchoring (Frydman & Rangel, 2014;Hsee et al, 2019). This is consistent with Pearson's (2021Pearson's ( , 2022 perspective, which indicates that individuals who allocate their attention and cognitive resources (personal financial salience) to financial planning products demonstrate better financial behaviour. Focusing individuals' attention on financial matters is positively associated with low retirement insecurity.…”

“…The level of participant involvement and engagement (which is perhaps akin to the concept of personal financial salience (Pearson, 2021)) in addition to warnings were both factors contributing to the efficacy of debiasing framing (Cheng & Wu, 2010). In designing a system to support investor decision-making, Bhandari and Hassanein (2012) conceptualized how multiple approaches could be combined into a single system, which literature suggests has value.…”

Personality, financial risk‐taking attitude, and older individuals' stock investment decisions

“…Individuals who are high on conscientiousness tend to be more cautious in their investment decision-making and are likely to have better financial knowledge. This trait is associated with participation in short-term investing (Mayfield et al, 2008), lower likelihood of investing in stocks (Wiesel, 2017), and lower levels of unsecured debt (Brown & Taylor, 2014;Pearson et al, 2023;Sommer & Lim, 2022). In general, conscientiousness has been linked to prudent financial behaviors, as people who score high on this trait may choose to reduce the uncertainty of future stock market risk by holding no or fewer stocks in their investment portfolios.…”

“…Research shows that many factors, including personal characteristics, shape participation in stock investment (Gambetti & Giusberti, 2019). For instance, studies have shown that financial literacy (Almenberg & Dreber, 2015), cognitive skills (Frederick, 2005), and market expectations and beliefs (Li & Li, 2015;Pearson et al, 2023) are associated with stock market participation and investment decisions. Additionally, researchers have found a connection between personality and investment decision-making (Gambetti & Giusberti, 2019).…”

Perception versus the reality of financial situation: The role of personality traits in the United States

“…These adjectives were based on a 31-item assessment provided by the Midlife Development Inventory (MIDI). The scale provided by MIDI has been used in consumer sciences studies consistently such as Asebedo ( 2019), Pearson et al (2023), andTharp et al (2020). Most of these adjectives were reverse coded to where 1 represents not at all, and 4 represents a lot.…”