Personality Test: How To Spend Money For Maximum Happiness

You know this question. You get asked, innocently enough, by a spouse or partner or friend: “Which do you prefer? We’ll go with that one.”

But it’s not innocent. It’s a minefield.

When Lady Libre asks me stuff like this I have to find a way to weasel out of responsibility. Because I know there’s no right answer. For lots of little things in life the Lady and I have different preferences. We seem to agree on big stuff. But when it comes to details like whether to share the calamari starter or Buffalo wings… well, we’re not always on the same page of the menu.

So if I choose my preference, she’ll harangue me for the meal. If I choose her preference, then I won’t get harangued. But I won’t get my wings, either. Can’t win. And odds are we’ll end up with the squid.

Does it means she’s right and I’m wrong about the merits of spicy chicken meats? On the record, absolutely. But off the record: no. It just means we have different consumption preferences. Which is about as ground-shaking a phenomenon as lint. We all know this. And we all take it for granted. And that’s that.

How to spend money for maximum happiness
How to spend money for maximum happiness

But there’s been a trend for people to believe a single “best” or one-size-fits-all way to spend money is the key to maximum happiness. Experiences provide a greater return than vile stuff, the mantra goes.

You’re happier that way, dammit! Stick with the program! Sell that worthless couch and go buy yourself some skydiving before it’s too late!

Which is great advice for some of us out there, and it’s even got some compelling scientific support. And it’s outstanding as long as we like skydiving better than couches.

But it turns out some of us don’t actually prefer skydiving to couches. Or lattes to books. Or calamari to Hooters. Or even entertainment to traffic fines.

“What in the shit, FL? Are you huffing paint thinners?!? Traffic fines?” you query.

It’s all right there. In the research. The latest research, that is. Researchers looked at 59 spending categories and linked the happiness and life satisfaction results of spending on those categories with the unique personality traits of different consumers.

It turns out that what we all take for granted – unique and individual consumption preferences – really do exist. And spending our money in accordance with our consumption preferences can materially improve our happiness. And, most interestingly, what our “predisposed” preferences are can be more or less understood on the basis of the “Big Five” or OCEAN personality factors. Which means, if we can understand our individual personality traits, we can garner insight as to the types of spending that will likely max out our happiness.

Which further means this new research can help free you from the experiences-only, one-size-fits-all spending poncho that probably doesn’t hold much water. So you can replace the poncho with a Savile Row bespoke three-piece, tailor-made spending guideline for getting the highest happiness return on your spending.

“…when spending matches the buyer’s personality, it appears that money can indeed buy happiness.”

We’re gonna walk through the OCEAN test and the research right now. At a high level, we’ll first address the relevant psychology stuff. Then we’ll cover how different personality traits have been linked with greater (or lower) satisfaction with spending money on different kinds of goods/services categories. And we’ll go through the practical implications of all this in the real world so you can modulate your spending to more closely align with your unique personality profile.

No. 2 Pencil

The OCEAN personality test finds a person’s place along a “high-low” continuum of five personality traits.

For instance, the “E” in OCEAN stands for “Extraversion,” and so, in part, the test measures whether someone exhibits “high” or “low” extraversion: Is that person more outgoing than not? Is that person more or less interested in social prestige? Etc.

The “O” stands for “Openness”: Are you a more or less abstract thinker? More or less open to experiences?

“C” is for “Conscientiousness”: Are you more or less self-disciplined?

“A” is for “Agreeableness”: Do you tend to put others’ needs before your own?

“N” is for “Neuroticism”: What’s your propensity to experience negative emotions?

Now, some of these terms seem to have positive connotations, and others negative. But we’ve all got varying levels of each in our personalities. Everybody’s neurotic to some degree, and everybody values social interaction to an extent. The idea behind the test is to identify someone’s particular “concentration” of each trait.

I say all that stuff about everybody having some of each because I took the test myself. And, although I wasn’t too surprised at the results, it turns out that, according to science, I’m officially a jerk.

I scored nose-bleed high on Openness (80%), Conscientiousness (95%) and Extraversion (77.5%). I scored what is considered “low” on Agreeableness (57.5%). And I pretty much didn’t even register on Neuroticism (7.5%).

Personality Test: How To Spend For Maximum Happiness.
Personality Test: How To Spend For Maximum Happiness.

In sum, I’m a self-involved, ambitious, competitive, risk-seeking discipline freak who only sees others as stepping-stones to status and power, and is calm, carefree and super-confident about it all. 🙂

You can take the same test I did here. This is not to suggest an endorsement for the group that administers the test; I can’t comment on the quality of what they do. But their test popped up in my research, and it doesn’t require registration (i.e., can be done anonymously), and it’s free.

So I confidently and carelessly powered through the (very short) questions while I thought about how awesome and creative this post would be and completely ignored the needs of humanity, who I planned to antagonize later in a totally optimistic and relaxed sort of way. 🙂

Now, why do we care about this OCEAN thing? Well, it’s because researchers did some novel study into 1) how those five factors influence spending patterns, and 2) how spending money on different categories of goods/services affects happiness of people with different personality characteristics.

Basically, researchers found that people with, say, high Neuroticism obtained higher happiness spending their money on different things than people with low Neuroticism. And, for a person with, say, high Extraversion, different categories of products/services provided different levels of happiness.

Multiple Guess

So, what should we buy, or not? And what are the real-world implications of the research?

Let’s start with the real-world thing. The research really has implications for marginal spending decisions. We all need housing. So we can’t completely forgo shelter spending just because our personality types tend to prefer eating out or whatever. But we can modulate our spending in accordance with type to best suit ourselves by spending a bit less on housing and a bit more on eating out.

“Hey, FL, this is all great, bro. But, uh, isn’t everybody already doing this on their own? I mean, don’t people already spend their money to suit their tastes? Why do we need a special psych test to let us know how we ought to spend?” you ask.

Excellent questions. First, as the research points out, most people do roughly seem to spend in accordance with their OCEAN-type preferences. So most people do a pretty good job in general. Nevertheless, just as my spending doesn’t always reflect my preference for Buffalo wings over calamari, there are lots of reasons that, from time to time, we don’t spend money in accordance with our true preferences. Sometimes those reasons are social in nature, like how we feel peer pressure to drive new cars even though maybe we don’t really like cars, etc. And it’s not a leap to suggest that people follow social cues for spending because they “feel” like they ought to, despite ultimately obtaining little or negative satisfaction from those socially-molded spending patterns. That is, there’s probably some systematic un-happy spending going on for lots of people.

An additional counterargument to the “don’t we already do this?” point goes like this: Just because I know how to drive, does it mean I can’t do a better job at the margin by, say, watching the real-time fuel consumption meter and modulating my speed and acceleration to maximize efficiency? Not at all. Sure, I already try to drive efficiently. But I can do better. And couldn’t I do even better if I had a simple rule of thumb to help guide me in seemingly ambiguous situations? Sure ‘nuff.

We can improve at stuff if we have a better understanding of the underlying mechanisms and we can think deeply about motivations and results and feedback, etc.

That’s where this research comes in, at the margins: Spend a little less on X and a little more on Y. So we can do better: Get 5 “units” of happiness rather than just 4.

Which I think is sufficient to make the research worthy of consideration. After all, when it comes to something like happiness, it seems silly to not explore essentially free ways of improving it. Moreover, it’s not just a one-way street:

“…spending on products [that are not a good match for someone’s] personality not only may fail to improve their well-being, but also could be detrimental to it.”

Which implies that, by cutting spending on the “wrong” things we might be able to simultaneously save money and increase happiness.

(Technical note: In traditional economic theory, consumption preferences are thought of as being “revealed” by spending. People only spend money in accordance with their true preferences, always getting it right, the theory says. This new research suggests we don’t always get it right. And we can do better. In other words, it implies our preferences aren’t always fully expressed in our actual spending. Which anybody with a pulse or a spouse already knows.)

Answer Key

Ok. We’re off and running here. We know that we can identify our individual OCEAN type using the personality test, and we understand that our unique type has implications for which categories of spending might be expected to provide us the greatest and least levels of satisfaction. (We’ll get to the categories in a  minute.) We also know, as a real-world matter, we can best apply the findings at the margins of our spending patterns.

And we’re super pumped about it all because the effect of getting it right is powerful:

“[People] who bought products that more closely matched their personalities reported higher satisfaction with their lives, and this effect was stronger than that of total income or total spending… personality-matched consumption indeed results in higher levels of happiness.”

So, using old FL as the test case, what does the research say I ought to spend my pretty pesetas on to get the most grins?

The paper summarizing this research has a handy chart that lists 59 spending categories: things like “Books,” “Health Insurance,” “Accountants’ Fees,” “Traffic Fines,” and “Pets.”

They’re broad categories. And each category was determined to have either a high or low level of “alignment” with each of the five OCEAN factors. (Note: I won’t go into details about how this was done, but the methodology seems good to me.)

Basically, those spending categories with the highest scores for the OCEAN traits most heavily concentrated in an individual’s personality should be more appealing than those with lower scores, and vice versa. That is, is you score highly in a given OCEAN trait, then spending categories with high scores in that trait should be more beneficial for you. If you score low in a given OCEAN trait, then you’re less influenced by a spending category’s rank for that trait.

Best & Worst Spending Categories by OCEAN Factor
Best & Worst Spending Categories by OCEAN Factor

For example, travel-related categories are highly ranked on Openness and Extraversion factors. And relatively appealing on Agreeableness. And pretty neutral on Conscientiousness. And mildly unappealing on Neuroticism.

Which, overall, because I have high scores on Openness and Extraversion (and because there’s not a strong “countervailing” score on other factors to offset the effect), means I ought to like to travel. And spending money on travel ought to make me happy.

Which is pretty much right on target since I love to travel, do it frequently, don’t really pay attention to what it costs, and do occasionally look back and wish I’d traveled more when I could’ve but decided not to for some b-s reason.

So far so good. The research findings regarding my personality type’s spending preferences seem to line up with spending I’ve actually done that seems to have been especially satisfying for me.

I also should like Health & Fitness. Check. And Entertainment. Check. And Eating Out. Check. And thus Hooters. Check and Check.

I should be pretty unenthusiastic about Discount Stores. True.

I should hate gambling. Absolutely.

Overall, pretty good stuff from the survey.

Which suggests a few things to me.

First, my personal experience seems to support the research findings. Which means the research at least passes the smell test.

Second, I guess I’ll have a little less “cognitive dissonance” when I spend money on stuff I think I like…because now I know I like it. (Phew.) But seriously, there are some people for whom spending money is hard, and it can be helpful to feel validated that some quantum of discretionary spending really can have big implications for life satisfaction. So it’s okay to do from time to time and within reason.

And third, my personality type prefers Sports to Home Furnishings. So I need to sell my couch and go out and buy some skydiving.

Practical Exam

So, how can you put this whole thing to use in your life?

Step 1: Take the OCEAN Test

Doing the exam will help you identify which personality factors are most strongly expressed in your makeup. The results may surprise you, so don’t assume you already know. And besides, the test (linked above) is kind of fun, absolutely free and super-fast.

Step 2: Check the Chart

I earlier mentioned a handy table that appears on pages 4 and 5 in the research paper publishing these findings. I’ve replicated a portion of that table below for quick reference. Once you know your OCEAN factors, you can run through the chart and check which categories of spending have the highest and lowest values for the OCEAN factors most strongly expressed in your personality. Each spending category is rated from -3 (lowest score) to +3 (highest score).

For instance, since I’m highly Open, Conscientious and Extraverted, the travel-related categories are especially positive for me. And since I’m low on Agreeableness and non-Neurotic, I’m not much for giving gifts or charity. (I’m a jerk.)

One way to use the table is to find spending categories that rank highly for your highest-scoring OCEAN factors. These are categories most likely to enhance your life satisfaction. Categories with the lowest (i.e., negative) ranks in your highest-scoring OCEAN factors are those least likely to enhance happiness.

Now, when you start combing through the table, you’ll find apparent contradictions. You’ll see, for instance, that Insurance is a worst-spend category for a highly Open personality and a best-spend category for a highly Conscientious personality. What to do in a case like mine, where I’m highly Open and Conscientious? Well, the way I this can best be reconciled is to view those contradictions as sort of canceling out. In my case, this conflict implies I shouldn’t really have strong feelings about Insurance spending. And that’s about right. I see the economic value in some kinds of insurance. But I don’t get as excited about GEICO as I do Hooters in, say, Ibiza.

Excerpt of Spending Category/Personality Factor Table
Excerpt of Spending Category/Personality Factor Table

(Technical Note: The way the research was done involved multivariate regression for “best match” spend categories against personality characteristics. So the approach I suggest for “canceling out” isn’t technically correct, but it’s good enough for everyday use.)

Step 3: Apply at the Margins, Judiciously

We talked previously about real-world constraints. Just because you may hate insurance doesn’t mean you can start mowing down geckos from Down Under in your uninsured Skoda. And it doesn’t mean you should forgo health insurance.

Instead, look at the margins of your spending patterns for opportunities to readjust spending so it more closely aligns with your type. And apply a dash of two of common sense. If you’re “supposed” to like art spending according to OCEAN typing done in the study, but you find museums nauseating, then don’t worry about it. Just think of the study’s findings as friendly suggestions offered by an outside observer. Maybe the study’s observations are really insightful for you; maybe not.

Also consider trimming spending from categories that consistently rank low for your most concentrated personality characteristics. This can be a great way to enhance happiness and spend less all at once.

And consider seeking out new ways to explore your highest-raking categories. For instance, if music’s an area suggested by the study, you might find happiness by hitting a free concert in town. No spending doesn’t mean the life-enhancement effect won’t be found in a highly-ranked category. Win-win, baby.

Step 4: Keep on Truckin’

Before we part ways, let me recommend you read the research paper published about these findings. It’s a wonderfully written piece, is very accessible and is a relatively quick read.

One author also was involved in research covered earlier on FinanciaLibre about the nexus between on-hand cash and life satisfaction, and I have a feeling more good stuff will be coming from his teams in the future, so it might be interesting to get to know his work a bit one-to-one.

Plus, even though anybody perusing this post would probably derive great happiness from spending a buck or two on the article, it turns out you can get that happiness for free (i.e., the full-text article is available at no charge, right here)!

Luchadores, does your OCEAN type surprise you? Do the spending categories recommended for you seem right? Is FL really as much of a jerk as the survey says?!?


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