How you spend your money can signal aspects of your personality

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How you spend your money can signal aspects of your personality, according to research published in Psychological Science, a journal of the Association for Psychological Science.

Analyses of over 2 million spending records from more than 2,000 individuals 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,” says Joe Gladstone of University College London, who co-led the research.

“Our findings demonstrate for the first time that it is possible to predict people’s personality from their spending.”

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 colleagues wondered whether the variety in people’s spending habits might correlate with other individual differences.

“We expected that these rich patterns of differences in peoples spending could allow us to infer what kind of person they were,” says Sandra Matz, who co-led the project.

In collaboration with a UK-based money management app, Gladstone and Columbia Business School researchers Sandra Matz and Alain Lemaire received consent and collected data from more than 2,000 account holders, resulting in a total of 2 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 organized into broad categories – including supermarkets, furniture stores, insurance policies, online retail stores, and coffee shops – and the researchers used a machine-learning technique to analyze whether participants’ relative spending across categories was predictive of specific traits.

Overall, 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 jewelry and less on donations.

The researchers 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,” says 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.”

Viewed in the context of previous research that has attempted to use online behavior to predict personality, these results suggest that spending-based predictions of personality are less accurate than predictions based on Facebook “likes” or status updates, which offer a more direct reflection of individual preferences and identity.

However, spending-based predictions seem to be just as accurate as predictions based on individuals’ music preferences and Flickr photos.

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

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.

“This means that as personality predictions become more accurate and ubiquitous, and as behavior is recorded digitally at an increasing scale, there is an urgent need for policymakers to ensure that individuals (and societies) are protected against potential abuse of such technologies,” Gladstone, Matz, and Lemaire write.


The study, published in Psychological Science, a journal of the Association for Psychological Science, revealed that people who spent more money on purchases that aligned with their personality traits reported greater life satisfaction.

Spending-personality fit was more strongly associated with life satisfaction than were either total income or total spending.

The study was conducted by researchers at Cambridge Judge Business School and the Psychology Department of Cambridge University in collaboration with a UK-based multinational bank.

Customers were asked whether they would complete a standard personality and life satisfaction questionnaire, and to consent to their responses being matched anonymously for research purposes with their bank transaction data.

The final study was based on 76,863 transactions of 625 participants–none of whose names is known to the authors.

The study whittled down 112 spending categories automatically grouped by the bank into 59 categories that had at least 500 transactions over a six-month period.

The study matched spending categories on the widely recognized “Big Five” personality traits–openness to experience (artistic versus traditional), conscientiousness (self-controlled vs easygoing), extraversion (outgoing vs reserved), agreeableness (compassionate vs competitive), and neuroticism (prone to stress vs stable).

For example, “eating out in pubs” was rated as an extroverted and low conscientiousness (impulsive) spending category, whereas “charities” and “pets” were rated as agreeable spending categories. Further examples can be found below.

The researchers then compared the participants’ actual purchases to their personalities using this scale, and found that people generally spent more money on products that match their personality.

For example, a highly extroverted person spent approximately £52 more each year on “pub nights” than an introverted person. Similarly, a highly conscientiousness person spent £124 more annually on “health and fitness” than a person low in conscientiousness.

And the data showed that those who bought products that more closely matched their personalities reported higher satisfaction with their lives, and this effect was stronger than that of their total income or total spending.

The study was authored by Sandra Matz, a PhD candidate in the Psychology Department of the University of Cambridge; Joe Gladstone, a Research Associate at Cambridge Judge Business School; and David Stillwell, University Lecturer in Big Data Analytics & Quantitative Social Science at Cambridge Judge Business School.

“Historically, studies had found a weak relationship between money and overall well-being,” says Joe Gladstone.

“Our study breaks new ground by mining actual bank-transaction data and demonstrating that spending can increase our happiness when it is spent on goods and services that fit our personalities and so meet our psychological needs.”

The researchers believe the findings hold widespread implications, including for Internet merchants using search-based recommendation engines.

Companies can use this information to recommend products and services that don’t just increase clicks, but will actually improve the well-being of their customers–allowing companies to forge better relationships with customers based on what makes them happier.

The researchers also backed up their findings by running a second experiment, where they gave people a voucher to spend in either a bookshop or at a bar.

Extroverts who were forced to spend at a bar were happier than introverts forced to spend at a bar, while introverts forced to spend at a bookshop were happier than extroverts forced to spend at a bookshop.

This follow-up experiment overcomes the limitations of correlational data by demonstrating that spending money on things that match a person’s personality can cause an increase in happiness.

“Our findings suggest that spending money on products that help us express who we are as individuals could turn out to be as important to our well-being as finding the right job, the right neighborhood or even the right friends and partners,” says Sandra Matz.

“By developing a more nuanced understanding of the links between spending and happiness, we hope to be able to provide more personalized advice on how to find happiness through the little consumption choices we make every day.”


More information: Joe J. Gladstone et al, Can Psychological Traits Be Inferred From Spending? Evidence From Transaction Data, Psychological Science (2019). DOI: 10.1177/0956797619849435

Journal information: Psychological Science
Provided by Association for Psychological Science

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