To compensate for low-income, extraverts spend more on items that reflect higher status than their introvert counterparts – a new study has claimed.
The study by researchers at University College London published in journal of the Association for Psychological Science points at how at least part of the spending decisions of low-income individuals may depend on their personality traits including the need to reflect higher status.
Generally speaking, individuals’ spending patterns may reflect personality differences in how they respond to having low income. The motivation behind the study was to understand how personality differences might play a role in the experiences of those living on a low income.
Previous studies that have investigated the so-called “compensatory consumption” indicate that people purchase items or services as a means of compensating for self-perceived shortcomings. UCL researchers hypothesized that the more individuals are focused on their relative social and economic status, the more likely they will be to purchase goods and services intended to boost their status.
Specifically, the researchers expected 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.
To test this hypothesis, the researchers worked with a retail bank to recruit 718 bank customers for participation in the study. The participants provided information about their age, employment status, income, savings, debt, and cash withdrawals and they consented to have their responses linked to their actual bank account data from the previous 12 months.
Scientists than examined each individual’s spending, using independent ratings from a group of online participants to calculate the status of purchases in each spending category automatically assigned by the bank. High-status categories included spending on foreign air travel, electronics, and art institutions, while low-status categories including purchases related to pawnbrokers, salvage yards, and discount stores.
The data showed that low-income participants seemed to spend their income in different ways depending on their level of extraversion. As expected, low-income participants who rated high on trait extraversion spent more on high-status items compared with participants who were less extraverted.
These findings provide initial evidence that income and personality interact to influence spending behavior and, Landis and Gladstone note, they may have implications for researchers and policymakers who are trying to design policies aimed at providing assistance to low-income populations.