Responsible Personal Finance: The Role of Conscientiousness in Bank and Pension Savings in Chile

• Date: 01 March 2016
• Published date: 01 March 2016
• DOI: http://doi.org/10.1111/irfi.12069
• Author: Edgar E. Kausel,Erwin Hansen,Pablo Tapia

Responsible Personal Finance: The

Role of Conscientiousness in Bank

and Pension Savings in Chile*

EDGAR E. KAUSEL,ERWIN HANSEN AND PABLO TAPIA

Faculty of Economics and Business, University of Chile, Santiago, Chile

ABSTRACT

We investigate the role of trait conscientiousness, from the Big Five person-

ality traits, in explaining individual saving behavior. Conscientiousness is a

disposition to be responsible and pursue non-immediate goals; thus, we

expect this trait to positively predict saving behavior. Using a nationally

representative survey from Chile, we find the expected effect of conscien-

tiousness on pension and bank savings.

JEL classification: C2, D03, D14, E21, J32

I. INTRODUCTION

The past decade has seen growing interest among economists and financial

academics in the role of personality traits in economic outcomes (Almlund et al.

2011). Prior research has shown that personality traits predict a variety of

variables ranging from occupational attainment and earnings (Heckman et al.

2006) to experimental game decisions (Kagel and McGee 2014). Despite this,

little to no attention has been paid to whether personality traits affect saving

behavior (for an exception, see Brown and Taylor 2014). This is surprising, given

that theories about why people save money typically involve psychological

motives such as effort or autonomy (Browning and Lusardi 1996), which are

linked to personality traits.

In the present note, we examine whether a particular personality trait, the

factor conscientiousness from the widely used Big Five taxonomy (Becker et al.

2012), is related to saving behavior in a Chilean sample.1The core of consci-

entiousness is a disposition to be responsible, organized, and persistent (McCrae

* Financial support from FONDECYT,under grant Iniciacion #11130277, is greatfully acknowledged.

1 We should note that Brown and Taylor (2014) examine a similar issue using a UK sample and

find no significant results. In our paper, we use not only bank savings, as Brown and Taylor

(2014) do, but also voluntary pension savings. This is particularly interesting because our

sample is from Chile. Chile is usually taken as a classic example of an individual capitalization

pension system; thus, studying how a personality trait may affect saving behavior is relevant

given this context.

bs_bs_banner

DOI: 10.1111/irfi.12069

© 2015 International Review of Finance Ltd. 2015

International Review of Finance, 16:1, 2016: pp. 161–167