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Do Nice People Fare Worse Financially?

(Source: forbes.com)

Researchers have been very interested in personality traits in recent years—the “big five” include openness, conscientiousness, extraversion, agreeableness, and neuroticism—and the types of outcomes they may predict. For instance, people higher in neuroticism appear to be less happy, but more creative. People who are higher in conscientiousness are generally healthier and better at saving money.

Now, a new study from researchers at Columbia Business School and University College London finds that people higher in agreeableness—a trait that’s exemplified by kindness, “niceness” generosity, and warmth—also tend to have poorer financial outcomes than those lower in the trait.

The study is published in the Journal of Personality and Social Psychology.

“We were interested in understanding whether having a nice and warm personality, what academics in personality research describe as agreeableness, was related to negative financial outcomes,” said Sandra Matz in a statement. “Previous research suggested that agreeableness was associated with lower credit scores and income. We wanted to see if that association held true for other financial indicators and, if so, better understand why nice guys seem to finish last.”

The team looked at data from a number of different sources, including national surveys and questionnaires, government data on insolvency rates, bank account data, and online surveys. They looked for correlations between the big five personality traits with financial outcomes over the years.

Agreeableness was the only trait that was significantly correlated with finances across all experiments (sources of data).

One of the experiments followed people from childhood through the next 25 years; the researchers found that people measuring higher in agreeableness early in life were more likely to have financial problems later in life. This suggests that if there is causation, it can’t be that poorer finances cause agreeableness, but rather, more agreeableness to begin with might cause financial issues in the years to come.

Among adults, agreeableness was also linked to a number of less desirable financial outcomes. For instance, one experiment found that people particularly high in agreeableness also had 50% greater risk of having filed for bankruptcy.

But it’s not that agreeable people are less smart or less able to make money, but they do seem to care less about it—so they may not handle money as well as less agreeable people. “We found that agreeableness was associated with indicators of financial hardship, including lower savings, higher debt and higher default rates,” said study author Joe Gladstone. “This relationship appears to be driven by the fact that agreeable people simply care less about money and therefore are at higher risk of money mismanagement.”

Of course, agreeableness didn’t predict financial doom all the time. It just made things more difficult, particularly for people with lower incomes. “Not every agreeable person is at equal risk of experiencing financial hardship,” Gladstone said. “The relationship was much stronger for lower-income individuals, who don’t have the financial means to compensate for the detrimental impact of their agreeable personality.”

Results from studies like this one might help financial institutions come up with more effective ways of helping people save money. For people higher in agreeableness, vs. neuroticism or conscientiousness, different strategies may be more successful. This type of thinking is one the reasons that psychologists and behavioral economists like to study the connections between personalty and outcomes in different walks of life. Though some of the insights may sound a little judgey, they may actually do some good in the greater picture.

“Our results help us to understand one potential factor underlying financial hardship, which can have serious implications for people’s well-being,” said Matz. “Being kind and trusting has financial costs, especially for those who do not have the means to compensate for their personalities.”

 

More Info: forbes.com

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