Spending and Personality

People are not especially good at describing how they spend money. Ask someone to estimate last month's restaurant bill and the answer will be wrong, usually in a flattering direction. Bank transaction records do not have that problem, and much of my research uses them to study financial behaviour as it actually happens rather than as people report it.

One thread asks what spending reveals. Working with millions of transactions matched to psychological surveys, we have shown that personality traits can be predicted from purchase histories alone — the categories someone spends in, and the rhythm of that spending, carry a psychological signal.

A second thread asks what follows from that. If personality shows up in spending, then the fit between the two should matter: people whose purchases match their disposition report higher wellbeing than people who spend the same amount against type. That finding has held across survey data, transaction records, and a field experiment in which we changed what people were offered.