Personality, Income and Consumption

Listen to the show here

Full Text. 

On a recent trip to the mall, I saw a pair of vintage Air Jordan basketball shoes. I pointed them out to my daughter, commenting that when I was younger, the Jordans were the most sought-after, popular shoes people could buy. But, as they cost over $100 at the time, I could never justify purchasing them.

The story of those Jordans is also applicable today. Researchers have shown that people will sometimes purchase various products, whether shoes, bags, or cars, as way to signal high status. People who live on a low income spend a higher percentage of their resources on such products, and researchers suggest this could be due to efforts to enhance self-worth or personal power.

Recently, Blaine Landis and Joe Gladstone, of University College London, explored these dynamics and also considered whether personality influenced the purchases. They thought that extroverts, or people who are social and ambitious, might be more likely to engage in status-enhancing behaviors than their more reserved, introverted counterparts.

As they expected, the authors found that extroverts outspent introverts on status expenditures. The differences were most pronounced among people who made the least amount of money. Though there were differences based on personality type among the wealthy, these were small.

The findings show that income level and personality can affect how people spend and on what they spend their money.

Returning to the Jordans, today, they cost over $150, and I still can’t justify the purchase, regrettably.