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Personality and Financial Culture: A Study of Mexican Youths

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International Handbook of Financial Literacy

Abstract

This chapter studies the relationship between personality and financial culture using survey data for 3200 Mexican youths, ages 15–29. Personality is measured with the Big Five. Financial culture is measured using 41 items grouped into eight separate “aspects” of financial culture, and summarized in a single index using principal component analysis. The results show that: (1) personality traits matter differently for different aspects of financial culture; (2) all Big Five are significantly associated with the index of financial culture; (3) the relationship between personality and financial culture differs by respondents’ age, even within youths. In conclusion, the variation in results observed in the literature in terms of which personality traits are associated with financial culture might be explained to some extent by differences in both the aspects of financial culture analysed and the age of respondents in the samples used.

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Notes

  1. 1.

    World Bank Statistics, series FB.ATM.TOTL.P5.

  2. 2.

    Statistics of Banco de México, series SF61870 and SF61871.

  3. 3.

    The term “financial culture” is used throughout this chapter to refer to people’s perceptions, attitudes, and knowledge directly affecting their financial decisions. It is broader than financial literacy, financial education, and financial capabilities. It could include social norms, traditions, habits, and subjective opinions.

  4. 4.

    Soldz and Vaillant (1999) provide evidence of the stability of the Big Five personality traits using a 45-year longitudinal panel.

  5. 5.

    A detailed description of the survey and the sample can be found in Banamex (2014).

  6. 6.

    A concrete example of an indicator affected by respondents’ demographic characteristics is whether they have a credit card. Since people under 18-years-old by law cannot have a credit card, and getting one requires proof of income, an indicator of whether the respondent has a credit card is correlated with the respondent’s age and employment status.

  7. 7.

    Cronbach’s alpha is indicative of the extent to which the items of an additive scale measure the same latent variable. A higher alpha means the items are more correlated.

  8. 8.

    Not all questions were answered by all respondents. The correlation coefficients were computed using respondents with valid scores for each pair of aspects shown.

  9. 9.

    The omitted statement is: “I’m considered exceptionally or unusually intelligent.” Banamex, the sponsor of the survey, deemed that question impolite and excluded it.

  10. 10.

    Socioeconomic status is defined in the survey according to the methodology known as “AMAI 8 × 7” of the Mexican Association of Market Intelligence and Opinion Agencies.

  11. 11.

    Principal components analysis is a statistical procedure to convert a set of observations of correlated variables into a set of values of linearly uncorrelated variables called principal components (Jackson 2003). The number of principal components is equal to or smaller than the number of original variables.

  12. 12.

    The first principal component has the largest possible variance, and each succeeding component in turn has the highest variance possible under the constraint that it is orthogonal to (i.e. uncorrelated with) the preceding components.

  13. 13.

    For an explanation of how measurement error creates an attenuation bias see Wooldridge (2003), Chap. 9.

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Authors and Affiliations

  1. Microanalitica, 1236 N. Marion Ct., Chicago, IL 60622, USA

    Pablo A. Peña

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  1. Pablo A. Peña
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Correspondence to Pablo A. Peña .

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Editors and Affiliations

  1. Friedrich Schiller University Jena , Jena, Germany

    Carmela Aprea

  2. Goethe Universität Frankfurt, Frankfurt, Germany

    Eveline Wuttke

  3. Johannes Gutenberg Unversity Mainz, Mainz, Germany

    Klaus Breuer

  4. National Institute of Education Nanyang Technological University, Singapore, Singapore

    Noi Keng Koh

  5. University of Birmingham, Birmingham, United Kingdom

    Peter Davies

  6. Vienna University of Economics and Business, Vienna, Wien, Austria

    Bettina Greimel-Fuhrmann

  7. California State University, East Bay, Long Beach, California, USA

    Jane S. Lopus

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Peña, P.A. (2016). Personality and Financial Culture: A Study of Mexican Youths. In: Aprea, C., et al. International Handbook of Financial Literacy. Springer, Singapore. https://doi.org/10.1007/978-981-10-0360-8_31

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  • DOI: https://doi.org/10.1007/978-981-10-0360-8_31

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  • Online ISBN: 978-981-10-0360-8

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