A champagne lifestyle on a beer income: More personality predictors of fiscal irresponsibility
Abstract: Using self-report data (N=348), we investigate whether Fiscal Irresponsibility is correlated with the personality variables of Deferred-Gratification, Impulsivity, Risk-Taking, Self-Regulation and Consideration of Future Consequences. A new Fiscal Irresponsibility scale was developed using exploratory and confirmatory factor analysis. The scale was shown to consist of two underlying factors interpreted as “irresponsible spending” and “financial planning” that were adequately accounted for by a global Fiscal Irresponsibility factor. Next, an iterative series of stepwise regressions, with Fiscal Irresponsibility, as the dependent variable were estimated using Structural Equation Modeling in Mplus 6.0. Each of the variables were significantly correlated (ranging from r .354 – r -.850) with Fiscal Irresponsibility. Deferred-Gratification showed the largest correlation with Fiscal Irresponsibility (69.6% shared variance), whilst the combination of Deferred-Gratification and Self-Regulation accounted for the largest proportion of variance in Fiscal Irresponsibility (76.6%). These findings add to the growing body of evidence suggesting that the expression and suppression of impulses is implicated in irresponsible financial behavior.
Notes: (David) Our previous research has shown that in scam compliance impulsivity and self-regulation play a strong part. This is article highlights a link between fiscal irresponsibility and falling for a scam (as they share some of the salient factors). This is useful in psychometric tool construction.
Article available to IAREP 2011 conference attendees and on this site. David Hughes (one of the authors) kindly gave permission for the article to be available from this site, too.