Personality and Money Matters: The Relation of State Resident Neuroticism to Common State-Level Financial and Economic Indicators

Abstract

Three separate sets of analyses with the 50 American states as analytical units determined relations of state resident neuroticism assessed from 1999 to 2005 to four state-level financial and economic indicators gauged in 2008, 2017, and 2018: satisfaction with standard of living, economic confidence, worry about money, and financial wellbeing. The general hypothesis that higher state resident neuroticism is associated with lower state satisfaction with standard of living, lower economic confidence, higher worry about money, and lower financial wellbeing was consistently supported in the 12 multiple regression equations across the three analytic sets. These associations persisted with the direct or indirect simultaneous consideration of state personal income per capita, percent of individuals below the poverty line, unemployment rate, Gini index of income inequality, and educational attainment. The hypothesis also was supported preliminarily by the underlying Pearson correlations between neuroticism and the six criteria. Socioeconomic variables were much less consistently related to the four economic and financial indicators. A sizable proportion of variability in each of the four common financial and economic indicators could be attributed to neuroticism levels in the different states. It is concluded that perhaps political and economic pundits and public service professionals accustomed to taking such financial and economic indicator estimates at face value and forecasting outcomes or suggesting remedies centered on the assumed dominant influence of underlying objective economic factors should be cognizant of the importance of neuroticism as a contributing variable in this context, and that conventional forecasts and remedies might be misleading and ineffective.