Low-Income extraverts spend more on status than introverted peers

The types of goods and services that low-income individuals buy may depend, at least in part, on their personality traits, according to new research published in the journal Psychological Science.

What the researchers say: “Our findings suggest that extraverts compensate for having low income by spending more on items and experiences that reflect higher status,” says the first author on the research. “In other words, individuals' spending patterns may reflect personality differences in how they respond to having low income.”

“Past research tends to treat the experience of low income and relative deprivation as a condition that affects everyone equally, and we wanted to explore whether this was indeed the case,” he explained.

Studies investigating so-called “compensatory consumption” indicate that people purchase items or services as a means of compensating for self-perceived shortcomings. The 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.

The participants also completed a brief, validated measure of five core personality traits (openness to experience, conscientiousness, extraversion, agreeableness, and neuroticism).

The researchers 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 people had the same financial resources and/or budget available to them, but our data show that they spent this money in very different ways,” observe the researchers.

This pattern held even after the researchers accounted for other potential factors, such as age, employment status, and relative levels of savings and debt. And the relationship between personality and spending was the same regardless of whether the researchers looked at overall spending on high-status categories or status spending as a proportion of total spending.

However, the data indicated that personality-related differences in spending seemed to diminish as participants' income increased, and therefore as their sense of physical safety increased.

These findings provide initial evidence that income and personality interact to influence spending behavior and, the authors of the study note, they may have implications for researchers and policymakers who are trying to design policies aimed at providing assistance to low-income populations.

So what? Most studies have shown that a sense of status is very largely linked to self-esteem. We get a sense of status when we feel that other people value us, admire us or that they are less fortunate than us. Both our sense of having status and self-esteem are a reflection of how we perceive other people perceive us. The higher that perception, the higher our self-esteem or the sense that we have status.

This study adds weight to what we have said for a long time: one of the most important drives we have as human beings is the drive for status—for recognition—and ultimately for safety since safety and status are very closely linked.

The interesting thing that this study brings up is the linkage between low-income extraversion and status. Many years ago I wrote a paper in which I sought to establish a link between low-income introversion, pessimism and depression. Both introversion (and extraversion for that matter) and depression are largely genetic in origin (about 40% each)—as has been shown in many recent studies. It may be that those that are of low-income and who are introverted are probably also pessimistic and depressed.

These people may have given up the on any chance of any diminution of their plight through an increase in status. Depressed or pessimistic people tend to spend less on themselves in any case.

What now? As a society we have to find better ways of giving people status than through purchases, income or wealth. We are not what we own or what we earn. In the corporate world we can help to give people a sense of status through simple actions such as praise from a manager or supervisor, appropriate recognition for their work and added responsibility or autonomy. These show that the manager values the employee and that they are part of the employee’s support network.

These actions give a person a sense of relational safety—a sense that they are valued, supported and “part of the tribe.” This can be a powerful antidepressant and bestower of optimism through the working of the dopamine and oxytocin reward systems. If you can give people status in this way extroverts may not need to buy it and introverts may become a god deal less introverted or depressed.