Couples made more downward than upward comparisons; however, upward comparisons had a more lasting impact, resulting in decreased satisfaction and optimism, and less positive self-perceptions and partner perceptions

Thai, Sabrina, Penelope Lockwood, and Elizabeth Page-Gould. 2021. “The Ups and Downs of Being Us: Cross-relationship Comparisons in Daily Life.” PsyArXiv. October 12. doi:10.31234/osf.io/8j2ds

Abstract: Cross-relationship comparisons are an integral part of relationship processes, yet little is known about the impact of these comparisons in daily life. The present research employed a dyadic experience sampling methodology (N=78 couples) with end-of-day surveys, end-of-week follow-up, and a six-month follow-up to examine how individuals make cross-relationship comparisons in daily life, the cumulative impact of these comparisons over time, and the dyadic consequences of such comparisons. Participants made more downward than upward comparisons; however, upward comparisons had a more lasting impact, resulting in decreased satisfaction and optimism, and less positive self-perceptions and partner perceptions, at the end of each day and the week. Individuals who made more upward comparisons were also less satisfied six months later. Individuals were also affected by their partner’s comparisons: On days when partners made more upward comparisons, they felt less satisfied and optimistic about their relationship, and less positive about themselves and their partner.

The moderating role of culture on the benefits of economic freedom: Introducing economic freedom enhances economic development if the population is oriented at long term benefits rather than short term gains

The moderating role of culture on the benefits of economic freedom: Cross-country analysis. Johan Graafland, Eelkede Jong. Journal of Comparative Economics, October 5 2021. https://doi.org/10.1016/j.jce.2021.09.005

Highlights

• Introducing economic freedom enhances economic development if the population is oriented at long term benefits rather than short term gains.

• High levels of uncertainty avoidance decrease the beneficial effects of economic freedom on economic development.

• Countries that benefit most from economic freedom are located in Asia.

• Countries that benefit least from economic freedom are located in South America.

Abstract: The implementation of pro-market policies and institutions is often suggested for enhancing a country's development. However, implementing pro-market policies and institutions has a mixed track record. Some have ascribed the bad results to the neglect of people's predispositions, often described as culture. In this study, we argue that successful implementation of pro-market policies and institutions requires that large parts of the population know how to use the resulting freedom in a way that can bring long term benefits. A panel analysis on a sample of 67 countries from 1970 to 2019 confirms this theoretical argument. We find that Long Term Orientation increases the effect of economic freedom on income per capita, whereas Uncertainty Avoidance weakens the positive relationship between economic freedom and income per capita. The policy implication is that the introduction of free market policies and institutions will particularly foster economic development in long-term oriented societies and in societies with low Uncertainty Avoidance.

Keywords: CultureEconomic developmentEconomic freedomUncertainty avoidanceLong term orientation

5. Conclusions and discussion

The main result of this study is that the positive association between economic freedom and economic development depends on the nation's culture. To support economic development, the culture should encourage individuals to take initiative and to act with a view to the long term consequences. An empirical study using Hofstede's cultural dimensions confirms these notions in that the interactions between economic freedom on the hand, and Uncertainty Avoidance (negative sign), and Long Term Orientation (positive sign) on the other are significant.

The results of this paper confirm the view that the introduction of economic freedom institutions and policies, as such, does not necessarily have an effect. The population should also be able and willing to put the economic freedom to good use. This would appear to be oriented toward future return and not toward short-term benefits. This outcome is of particular importance for international organizations (IMF, World Bank, EU), which provide advice to national governments. If a more market-oriented economy is requested, then suggesting institutions and policies be changed might not be the best advice. It could be that measures have to be taken beforehand to enhance the population's ability and willingness to take control of their own life. Consequently, a gradual process during which people can learn that as individuals they should take responsibility for action will deliver better results than a “big bang” solution targeted at implementing new rules and legislation only. Those who know how to deal with the newly created freedom could easily misuse the new regulation. As a result, in cases where the population at large does not know how to act properly, or is unable to do so, the chances are high for the creation of an elite that will enrich itself by buying assets at below market prices. Many of the countries of the former USSR stand as an example of this misuse of power. In many of these countries, oligarchs dominate the economy and politics and thus undermine both free markets and democratic policy making.

The results of this study are based on data from 67 countries. The cultural dimensions are derived from large surveys. This implies that the external validity is larger than that of experimental studies that make use of a limited set of students. The countries are also spread over different continents. However, due to data availability African countries are underrepresented. So extending the analysis to these countries would be interesting at such time as data become available. Furthermore, as discussed in our methodology section, our empirical analysis does not allow strong conclusions about the causality in the relationships between economic freedom and income per capita, because of the possibility of reverse causality. Future research should aim at developing proper instrumental variables that can theoretically be argued to causally drive economic freedom without affecting income per capita, and help identify the causality.

Conscientiousness could be the "wealth trait"; these industious individuals—demonstrating a steady, plodding behavior pattern—appear to build higher net worth by using other skills to convert their higher incomes into net worth

O.C.E.A.N.: How Does Personality Predict Financial Success? Jim Exley et al. Journal of Financial Planning. Oct 2021. https://www.financialplanningassociation.org/article/journal/OCT21-ocean-how-does-personality-predict-financial-success

Executive Summary

Purpose: Research across fields suggests that the Big Five personality traits (O.C.E.A.N.) predict individual behaviors including various financial outcomes. However, O.C.E.A.N. as a measuring tool has not caught on in the academic or applied financial planning field as extensively as it has in other disciplines. The purpose of this paper is to be the first to examine the relationship between the Big Five personality traits (O.C.E.A.N.) and four regularly collected financial outcomes—financial literacy, financial risk tolerance, income, and net worth—using a single data set. The correlational format shows the potential predictive ability of personality on various financial behaviors that is succinct and easy to understand.

Hypothesis: The research hypothesis is that O.C.E.A.N is a significant predictor of financial outcomes. Specifically, 14 out of a possible 20 correlations between O.C.E.A.N. and financial literacy, financial risk tolerance, income, and net worth will be significant.

Methods: Personality, financial literacy, income, and net worth were collected using a significantly powered current MTurk sample (n=412) representing the U.S. population. Correlations and OLS regressions were run controlling for age, gender, and education to test the relationship between the variables.

Findings: 16 out of a possible 20 correlations between O.C.E.A.N. and financial literacy, financial risk tolerance, income, and net worth were significant, though some were different than hypothesized. Specifically, this study was the first to find that extraversion correlated positively with financial risk-taking and income but negatively with financial literacy. There was no significant relationship with net worth. Conscientiousness correlated positively with financial literacy, income, and net worth, but negatively with financial risk tolerance. Neuroticism correlated negatively with financial literacy, income, and net worth. These findings contribute to the financial planning field by demonstrating that O.C.E.A.N. can be simply and systematically collected from individuals—much like risk tolerance—which adds insight into specific financial behaviors.

Possible Research Directions: Much like the systematic adoption of risk tolerance, the academic field of financial planning can be advanced by collecting robust personality data using the O.C.E.A.N. framework. This will allow for the generalization of findings from other fields over to financial planning. To assist researchers, the University of Michigan should consider adding robust measures of financial risk tolerance and personality to its valuable Health and Retirement Study. In addition, practicing financial professionals should consider collecting O.C.E.A.N. data on clients to gain additional insights into clients’ behaviors over and above standalone risk tolerance.

Discussion

This study sought to elucidate how the Big Five personality traits may play a role in describing household outcomes related to (1) financial literacy, (2) financial risk tolerance, (3) income, and (4) net worth. Eleven of the 14 hypotheses were supported and 16 of the 20 correlations were significant. OLS regressions and correlations tell a similar story. With regression, these associations are smaller and less stable because age, gender, and education have well-established relationships with aspects of O.C.E.A.N. By controlling for these covariates, we remove meaningful variance attributable to the personality metrics of interest. Acknowledging that these relationships will be weaker as less variance is available to explain, the discussion will focus on the bivariate correlations.

Financial Literacy. It was hypothesized that financial literacy would be positively correlated with openness and conscientiousness and negatively correlated with neuroticism. Each of these hypotheses was supported. When assisting individuals high in C and O, planners may see higher financial aptitudes. Open individuals likely value financial information as a way of continuous learning and have gathered knowledge along their financial journey. Conscientious individuals have likely also gathered financial knowledge possibly through study and determination to master the process. High Os and Cs may benefit from more detailed explanations of advanced topics involving their investing and planning. This advanced learning should allow high Os and Cs to grasp more complex strategies that may assist in reaching their goals. In addition, these individuals will likely appreciate a detailed discussion of the inner workings of various strategies, even if they decide against implementation.

Though neuroticism was negatively correlated with financial literacy, extraversion had a similar negative relationship. When assisting individuals with high E and high N, planners may see lower financial aptitudes. While high Ns may readily admit this shortcoming, high Es may deny low financial literacy as high Es can be prone to overconfidence (Schaefer, Williams, Goodie, and Campbell 2004). Planners assisting high Es and Ns should consider creative ways to spend time on basic financial literacy in review meetings rather than assigning self-learning tasks these individuals may not value or complete.

Financial Risk-Taking. For financial risk-taking, as hypothesized, extraversion had a significant positive relationship with risk tolerance while conscientiousness and agreeableness had significant negative relationships with risk tolerance. In a surprise finding of this sample, openness also had a significant negative relationship with risk-taking. Neuroticism did not have a significant relationship with an individual’s appetite for financial risk-taking. In the current climate, extroverts may pose a unique challenge. When assisting individuals with high E, planners should be mindful that big, extroverted personalities tend to add risk even when it may be detrimental to their long-term goals. Spending extra time evaluating and understanding high Es’ risk tolerance over and above industry protocol should be beneficial with these clients. Extroverts are often concerned with appearance and status (Naumann, Vazire, Rentfrow, and Gosling 2009). High Es may also be at higher risk for “Gambler’s Ruin” (Huygens 1657; Campbell, Goodie, and Foster 2004). A “sandbox strategy” or “trading account” consisting of a small set of risky assets that are fun to discuss at cocktail parties may scratch the risk itch, while not endangering the entire financial plan.

Planners may spend extra time understanding and assisting high Cs and As with their risk tolerance in an attempt to nudge them into riskier assets if needed to accomplish their long-term goals. Planners may consider more detailed explanations of the costs and benefits of risk, appealing to high Cs’ and As’ higher financial literacy.

Income. As hypothesized, income had a positive relationship with conscientiousness and extraversion, and a negative relationship with neuroticism. Financial industry compensation structures incent planning professionals to pursue larger accounts. In search of larger clients with higher incomes, planners may be unknowingly selecting individuals with high C and high E and deselecting individuals with high N. Planners could personally benefit from familiarizing themselves with the unique behavioral patterns of high Cs and high Es and tailoring their communication and recommendations to the individual. For example, knowing a high-income earner is high in conscientiousness should encourage planners to use education and discipline strategies—such as budgeting tools—often appreciated by high Cs. However, high-income Es may not value the extra education and may benefit more from automated strategies that systematically increase discipline—thus lowering risk—such as the automatic enrollment and asset allocation features that are included in various financial tools such as 401(k) plans.

Individuals high in neuroticism face a tall hill to climb. However, planners should be well equipped. Michael Kitces found in his 2018 annual survey of financial advisers that successful advisers often have lower N scores—meaning quality advisers often come with a high dose of emotional stability. With lower incomes, high Ns will need help embracing other paths to wealth building such as financial literacy, discipline, and risk-taking. However, individuals with lower incomes have been shown to have lower financial literacy and less access to financial institutions (Zhan, Anderson, and Scott 2006). High Ns may have the highest need for financial advice without the means to pay. This is an area where financial services might need to consider skills and tools developed in the counseling and mental health fields to better serve high-neuroticism clients. Understanding personality traits may provide clues as to the mechanisms individuals are employing to earn higher incomes that may or may not be beneficial to their long-term goals.

Net Worth. As hypothesized, conscientiousness had a positive relationship with net worth while neuroticism had a significant negative relationship. Extraversion was not found to have a significant relationship with net worth despite the finding that extroverts earn more. These findings, along with other studies (Duckworth et al. 2012), could lead to conscientiousness being considered the “wealth trait.” These industrious individuals—demonstrating a steady, plodding behavior pattern—appear to build higher net worth by using other skills to convert their higher incomes into net worth. Despite also earning higher incomes, high Es did not convert their higher income into higher net worth for this sample. Individuals high in neuroticism had significantly lower net worth, which is not surprising given lower incomes and lower financial literacy.

In total, 11 of the 14 O.C.E.A.N. personality trait hypotheses were supported. In addition, 16 out of a possible 20 personality–financial-outcome relationships were significant, though—as mentioned—a few were unexpected or in the opposite direction of the hypothesis. Clearly, the Big Five personality traits meaningfully predict a range of important household financial outcomes.

Implications

This study has several implications for researchers and those working in the financial services profession. For those in academia and the emerging field of wealth science, this study documents the associations among the Big Five personality traits and four household financial characteristics. Few studies have used net worth as a dependent variable in relation to personality modeling (Duckworth et al. 2012; Nabeshima and Seay 2015). Most personality research related to household finance topics has focused on income as the dependent variable. In The Millionaire Next Door, Stanley and Danko (1996) found that wealthier individuals tend to focus more heavily on measuring their net worth than lower net worth individuals, suggesting conscientiousness. However, few academic studies have followed up on this finding. Hopefully, this study inspires future studies using Big Five and net worth measures. Additionally, results from this study provide support for the model of risk-taking proposed by Irwin (1993).

From an applied standpoint, this study widens the pathway into furthering financial psychological research and expands the tools available to investors and financial service professionals as they attempt to grow wealth. Coaching and education—taking into account their unique O.C.E.A.N. profile—may provide additive benefits over and above standalone financial risk profiles. For example, high Cs may need assistance with adding risky assets to their portfolios, while high Es may need assistance in reducing financial risk and increasing their financial literacy.

Future Research

This study focused on the trait portion of personality. Traits describe a stable pattern of behavior, motivation, emotion, and cognition that can be observed in any sociocultural context (DeYoung 2011). However, individuals possess traits in a package (sometimes referred to as a personality “profile”), not standalone. Exploring repeating patterns of O.C.E.A.N. traits and financial outcomes could prove especially interesting. Secondly, much valuable research in the area of finance and personality is conducted using the University of Michigan’s Health and Retirement Study (e.g., Duckworth et al. 2012; Nabeshima and Seay 2015). Adding a more robust measure of financial risk tolerance and Big Five personality to this survey could potentially open the floodgates for financial personality research. Finally, the McAdams model of personality also includes characteristic adaptations and integrative life stories. Using the McAdams model as a guiding framework, future research that combines traits, experiences, and life stories should provide additional insight into repeatable patterns of financial behavior.

Limitations

The study has several limitations. First, it is important to replicate this pattern of findings in a larger sample to test their generalization. While the present self-reported MTurk sample had sufficient size to establish stable associations, ideally this study would have used the much larger Health and Retirement Study (HRS) that verifies financial data. Ideally, direct measures of net worth and income based on bank records, spouse reports, or other assessment approaches would be used. However, the purpose of this study was to use a robust measure of personality and risk tolerance not included in the HRS. While MTurk has been validated as a sampling tool, studies have shown that results can differ from the general population (Arditte, Cek, Shaw, and Timpano 2016). To test predictive validity, a larger sample representative of investors, a larger and more refined set of control variables, and multiple indicators of outcome variables would be ideal. Second, this study assessed a single point in time. It would be beneficial to have longitudinal data that establish perhaps a more direct or active role of personality in financial decision-making. For example, changes in conscientiousness at time one may lead to increased net worth at a later time. This would be particularly important to establish over market cycles.

Congenitally blind participants facially imitate smiles heard in speech, despite having never seen a facial expression

Facial mimicry in the congenitally blind. Pablo Arias, Caren Bellmann, Jean-Julien Aucouturier. Current Biology, Volume 31, Issue 19, October 11 2021, Pages R1112-R1114. https://doi.org/10.1016/j.cub.2021.08.059

Summary: Imitation is one of the core building blocks of human social cognition, supporting capacities as diverse as empathy, social learning, and knowledge acquisition1. Newborns’ ability to match others’ motor acts, while quite limited initially, drastically improves during the first months of development2. Of notable importance to human sociality is our tendency to rapidly mimic facial expressions of emotion. Facial mimicry develops around six months of age3, but because of its late emergence, the factors supporting its development are relatively unknown. One possibility is that the development of facial mimicry depends on seeing emotional imitative behavior in others4. Alternatively, the drive to imitate facial expressions of emotion may be independent of visual learning and be supported by modality-general processes. Here we report evidence for the latter, by showing that congenitally blind participants facially imitate smiles heard in speech, despite having never seen a facial expression.

For the much larger set of gender stereotypical vacancies, filling times, wages, & job durations were largely unaffected by the campaign: The elimination of stated preferences had at most small consequences on overall job match efficiency

Gender Preferences in Job Vacancies and Workplace Gender Diversity. David Card, Fabrizio Colella & Rafael Lalive. NBER, Working Paper 29350, Oct 2021. https://www.nber.org/papers/w29350

Abstract: In spring 2005, Austria launched a campaign to inform employers and newspapers that gender preferences in job advertisements were illegal. At the time over 40% of openings on the nation’s largest job-board specified a preferred gender. Over the next year the fraction fell to under 5%. We merge data on filled vacancies to linked employer-employee data to study how the elimination of gender preferences affected hiring and job outcomes. Prior to the campaign, most stated preferences were concordant with the firm’s existing gender composition, but a minority targeted the opposite gender - a subset we call non-stereotypical vacancies. Vacancies with a gender preference were very likely (>90%) to be filled by someone of that gender. We use pre-campaign vacancies to predict the probabilities of specifying preferences for females, males, or neither gender. We then conduct event studies of the effect of the campaign on the predicted preference groups. We find that the elimination of gender preferences led to a rise in the fraction of women hired for jobs that were likely to be targeted to men (and vice versa), increasing the diversity of hiring workplaces. Partially offsetting this effect, we find a reduction in the success of non-stereotypical vacancies in hiring the targeted gender, and indications of a decline in the efficiency of matching. For the much larger set of stereotypical vacancies, however, vacancy filling times, wages, and job durations were largely unaffected by the campaign, suggesting that the elimination of stated preferences had at most small consequences on overall job match efficiency.

Zebra finches: Is female mate choice repeatable across males with nearly identical songs?

Is female mate choice repeatable across males with nearly identical songs? Daiping Wang et al. Animal Behaviour, October 11 2021. https://doi.org/10.1016/j.anbehav.2021.09.001

Highlights

• Individual-specific mate preferences are common but poorly understood.

• Mate preferences differ strongly between individual female zebra finches.

• Individual males differ strikingly in their songs.

• Females respond differently to males with exceptionally similar songs.

• Song traits are hence not the target of individual-specific preferences.

Abstract: Individual-specific mate preferences are thought to be widespread, but they are still poorly understood in terms of mechanisms and function. Earlier work on a songbird (the zebra finch, Taeniopygia guttata) showed predominantly individual-specific mate preferences and signs of behavioural incompatibility with certain partners. However, the phenotypic target of preference or aversion remains unclear. A previous study suggested that female preferences may be related to variation in male song. Male zebra finches have individually distinct songs and together with individual-specific female song preferences they could function according to a ‘key–lock principle’. Here we report on a preregistered study in which we tested the hypothesis that individual females respond to males with highly similar songs in a similar way. We selected 18 duos of males with nearly identical songs and released them with females in communal breeding aviaries. We scored female preference as the female's responsiveness to male courtship and confirmed that females indeed had strong individual-specific mate preferences. However, female responsiveness scores were not positively correlated across males closely matched for their song, thereby rejecting the idea of a song-based ‘key–lock principle’ as an explanation for the observed individual-specific preferences. We suggest researchers should focus on details of the interactions between potential partners to elucidate the cause of behavioural incompatibility.

Keywords: behavioural compatibilitybirdsongindividualitymate choicemate preferencesmonogamypreregistration

A minority are responsible for the majority of lies told, some basically honest people have extreme bad lies days now and then, and a few people almost never lie

Unpacking variation in lie prevalence: Prolific liars, bad lie days, or both? Kim B. Serota, Timothy R. Levine & Tony Docan-Morgan. Communication Monographs, Oct 10 2021. https://doi.org/10.1080/03637751.2021.1985153

Abstract: Testing truth-default theory, individual-level variation in lie frequency was parsed from within-individual day-to-day variation (good/bad lie days) by examining 116,366 lies told by 632 participants over 91 days. As predicted and consistent with prior findings, the distribution was positively skewed. Most participants lied infrequently and most lies were told by a few prolific liars. Approximately three-quarters of participants were consistently low-frequency liars. Across participants, lying comprised 7% of total communication and almost 90% of all lies were little white lies. About 58% of the variance was explained by stable individual differences with approximately 42% of the variance attributable to within-person day-to-day variability. The data were consistent with both the existence of a few prolific liars and good/bad lie days.

Keywords: Deceptionlieslying over timeprevalenceprolific liarstruth-default theoryTDT