Household Wealth Accumulation and Debts in China: Personality Matters!

Abstract

Household wealth is important in maintaining financial well-being during the family life cycle. In addition to education, job, and income, family and personality factors may contribute significantly to household wealth accumulation. We study the effects of the Big Five personality traits and Locus of Control of both spouses on household wealth and debts, using three waves of the China Family Panel Survey. In addition to the age, education, and employment effects expected from the economic life-cycle model, we find significant effects of the financial respondent’s personality traits, supplemented by the spouse’s trait effects. The relevant trait effects differed between the accumulation of wealth and debts, thus suggesting different personality types involved in these situations. Some conclusions for policy making are drawn.

Keywords: Wealth accumulation, Debt, Personality traits, Big Five, Locus of control