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UNDERSTANDING HOW HOUSEHOLDS REACT TO THE ARRIVAL OF PERMANENT AND TRANSITORY INCOME IS OF INTEREST FOR RESEARCHERS AND REGULATORS. PREVIOUS STUDIES HAD TO USE IMPRECISE SURVEY DATA TO MEASURE CONSUMPTION AND THUS CONCLUSIONS OFTEN DIVERGED. WE LEVERAGE GRANULAR PERSONAL FINANCE MANAGEMENT FINTECH DATA TO TEST FRIEDMAN'S PERMANENT INCOME HYPOTHESIS AND TO ASSESS HOUSEHOLD SPENDING ELASTICITY AND MARGINAL PROPENSITY TO CONSUME FOR VARIOUS SPENDING CATEGORIES IN RESPONSE TO DIFFERENT INCOME TYPES.
What does your personality reveal about your financial behavior? Evidence from a FinTech experiment
(2022)
We co-operate with a German financial account aggregator (FAA) and conduct a personality survey with 1,700 app users. We combine the survey results with their anonymized transaction data and investigate links between personality traits and spending behavior. Observing many lottery windfalls in our dataset and treating these incidents as real-life experiments, we ask: what do individuals do with unexpected income changes? Our findings suggest that highly extraverted individuals tend to overspend in response to lottery windfalls.