How Behavioral Habits Mediate the Relationship between Personality Traits and Savings

Bachelor Thesis from the year 2016 in the subject Sociology - Consumption and Advertising, grade: 4.00, Maastricht University, language: English, abstract: The household saving ratio in the UK has dramatically decreased in recent years. Researchers and policy makers increasingly turn to behavioral economics theory to understand the decline and to derive new saving policy initiatives. By combining the existing literature in this field into a single framework, this paper aims to identify whether and to what extent particular saving habits mediate the relationship between personality traits and saving outcomes. For this, survey data from the UK is used and a dichotomous mediation analysis is conducted. It is found that substantial fractions of the effects that personality traits have on saving outcomes arise due to the influence which these personality traits have on specific saving behaviors, namely whether or not households keep their savings separate from their other money, whether or not they save regularly and whether or not they save out of precautionary motives. These findings can be used to design saving schemes which not only address effective saving habits but at the same time also appeal to individuals'' personality traits.