Do Personality Traits Impact Consumers’ Confidence Towards the Economy? An Indian perspective

Abstract

Policymakers across the world have been tracking consumer confidence to guide policy associating it with important macroeconomic variables such as the national income, inflation and employment. However, there is a dearth of studies that explore how consumer confidence is formed, and in particular, whether they are driven by non-rational factors and to what extent. This study argues that an association of personality traits with consumer confidence can be a strong indicator that consumer confidence towards the economy is affected by non-rational factors. Using a modified version of the Reserve Bank of India’s methodology to measure consumer confidence and the Big Five Inventory for gauging personality traits (n=267), the study finds that consumers’ perception of past economic performance is associated with conscientiousness, while consumer perception of future economic performance is associated with conscientiousness and neuroticism. The results also indicate that personality can account for any explanatory power that the demographic variables may have.