The role of personality in household saving and borrowing behaviour



The purpose of this paper is to investigate the extent to which personality influences saving and borrowing behaviour. We do this by exploiting a Dutch data set, which provides both detailed information on households' assets and debt as well as answers to two different personality inventories (the 16PA and the FFPI). Our findings are in line with previous investigations on the role of personality for saving. We found that the personality factors emotional stability, autonomy, and extraversion were robust predictors of saving and borrowing behaviour. Agreeableness, inflexibility, and tough-mindedness could explain certain types of saving. The inclusion of the personality factors significantly increased the explained variance in saving. The results suggest that when studying the effect of psychological variables on saving it is fruitful to divide saving into saving categories that differ with respect to the psychological mechanisms governing them. We also found that a partner's personality could contribute to predicting saving behaviour, which means that data should be collected from both heads of the households and their partners in multi-person households. Copyright © 2001 John Wiley & Sons, Ltd.