Journal of Family and Economic Issues

, Volume 35, Issue 2, pp 178–189

Older Adults’ Receipt of Financial Help: Does Personality Matter?

Authors

    • Department of Family, Youth and Community SciencesUniversity of Florida
  • Hyungsoo Kim
    • Department of Family SciencesUniversity of Kentucky
Original Paper

DOI: 10.1007/s10834-013-9365-0

Cite this article as:
Gillen, M. & Kim, H. J Fam Econ Iss (2014) 35: 178. doi:10.1007/s10834-013-9365-0

Abstract

This study examined the role of personality traits in the receipt of financial help at older ages using the 2006 and 2008 waves of Health and Retirement Study data. An investigation of (1) how the five domains of personality traits (openness to experience, conscientiousness, extraversion, agreeableness, and neuroticism) are associated with the receipt of financial help among older adults and (2) the relationship between personality traits and the source of financial help received was examined. Three sets of probit analyses were conducted. The results indicated that personality can predict financial help and the source of financial help. Specifically, older adults who exhibited relatively higher levels of neuroticism and agreeableness were more likely to receive financial help, whereas those who exhibited relatively higher levels of conscientiousness were less likely to receive financial help regardless of the source. Furthermore, older adults who had relatively higher levels of neuroticism were more likely to help themselves with individual sources such as credit cards whereas agreeable older adults were more likely to receive financial help from family members. These findings have implications for financial counseling, planning and education professionals, public assistance program directors, and policy makers. Understanding the effect of personality on financial decision-making can help with financial planning throughout life and inform outreach efforts for those in need of financial help.

Keywords

Personality traitsFinancial helpOlder adults

Introduction

Many older Americans have adequate financial resources to support their years in retirement, but a considerable number of older adults receive financial help from family members or public assistance programs. About 15 % of older parents receive financial transfers from family members including adult children amounting to $1,259 annually (Zissimopoulos 2001), and approximately 18 % of unmarried older mothers receive money or time assistance from their adult children (Henretta et al. 2011). There are also many older adults who receive help from public assistance programs: over 2 million (5 % of 40 million aged 65 or older) from Supplemental Security Income (SSI) (US Social Security Administration 2012), about 3.6 million (9 %) from the Supplemental Nutrition Assistance Program (Food Stamps) (US Department of Agriculture 2012), and 4.2 million (10.5 %) from Medicaid (US Social Security Administration 2011).

Many studies have investigated why family members help older adults from the motivational perspective. Major motives are altruism (i.e., love or unselfishness) and exchange (i.e., quid pro quo) between an older adult and their adult children or a combination of both (Cox 1987). With regard to public assistance, researchers and policy makers have been interested in understanding why eligible recipients are reluctant to apply for public help. One major issue is psychological cost rather than lack of information or financial cost (Andrade 2002; Moffitt 1983). Psychological cost associated with the receipt of financial help manifests as stigma. One recent study examined stigma associated with welfare receipt by dividing it into internal stigma (i.e., shame on themselves) and external stigma (i.e., others know) (Manchester and Mumford 2010).

The extent of perceived stigma associated with receiving financial help varies across individuals and may differ among financial help sources. In general, the difference in an individual’s perception and response to environment has been explained through an examination of personality in psychology (McCrae and John 1992). Personality is a pattern of thoughts, feelings, motives, and behaviors unique to each individual and determines how individuals perceive and respond to the environment (McCrae and John 1992). Although personality is a major predictor of differences in decision-making and behaviors, empirical research focused on financial help-seeking behavior has not included personality mainly due to data limitations. For example, a dataset may not have both personality variables and help-seeking variables.

The purpose of this study is to examine the role of personality traits in the receipt of financial help at older ages. Specifically, we investigated (1) how the five domains of personality traits (openness to experience, conscientiousness, extraversion, agreeableness, and neuroticism) are associated with the receipt of financial help among older adults and (2) the relationship between the personality traits and the source of financial help received.

Differences in individual personality traits may not only lead to different decisions regarding individual financial situations but may also lead to different reactions to changes in public policies. Retirement income will likely need to last more years for many older adults given increased longevity. Many older adults may be unwilling to ask for financial help when needed. Understanding the psychological barriers that influence an older adult’s decision to accept (or not accept) financial help can be used to inform public policies, agency practices, and outreach efforts.

Literature Review

Financial Help

Financial help can come from a variety of sources including personal sources such as unsecured debt (e.g., credit cards), a home equity loan, family sources such as help from family members or friends, and public sources such as food stamps. For example, older adults who live on fixed incomes may turn to their credit cards to pay for medical treatment, gas, food and other necessities. Garcia and Draut (2009) found that average credit card debt among older adults increased 26 % from 2005 ($8,138 in 2008 US dollars) to 2008 ($10,235). Furthermore, older adults reported the highest amount of credit card debt due to medical expenses, an average of $3,988 (Garcia and Draut 2009). About 17 % of older adults reported lacking funds to pay their medical bills (Doty et al. 2005). Paying for prescription medications and dental expenses were the two most cited reasons for using credit cards to pay for out-of-pocket medical expenses (Garcia and Draut 2009) and these expenses are a primary retirement concern among older adults (Genworth Financial 2010).

Older homeowners may tap equity in their homes as a financial buffer to cope with unexpected healthcare or household expenses. According to a recent survey conducted by MetLife, more than 13 % of older homeowners aged 65 and over had home equity loans; 8.5 % had only a home equity loan whereas 4.8 % had both a home equity loan and mortgage loan (MetLife 2009). About 1 % of older homeowners had a reverse mortgage (MetLife 2009). The majority of older homeowners consider their home a place to live or bequest rather than a spendable asset. However, it appears that some older homeowners may see their homes not just as secure places to live, but also as collateral for a loan and a retirement resource.

Even though about 34 % of low income older adults received assistance from the Supplemental Nutrition Assistant Program (SNAP) formerly known as Food Stamps (US Department of Agriculture 2012) and 9 % received meal assistance from the Elderly Nutrition Program or other organizations such as churches or nonprofits, many more older adults did not receive assistance but likely needed it (US Government Accountability Office 2011a). In 2009, about 9 % of elderly households were food insecure, meaning they were uncertain of having or unable to acquire enough food because they lacked resources (US Government Accountability Office 2011a). Even worse, 31 % of those older adults in poverty in 2009 were food insecure including 15 % whose food intake was reduced because they could not afford enough food (US Government Accountability Office 2011a).

Older parents may receive financial assistance from their adult children (Koh and MacDonald 2006). The Pew Research Center (2009) found that 14 % of older parent respondents reported receiving financial support from their adult children, whereas among respondents who had an older parent, 21 % reported providing financial assistance to their parent. The amount of financial support given to a parent is positively linked to their adult child’s household income and wage rates (Couch et al. 1999; Zissimopoulos 2001). Interestingly, adult children may be less inclined to provide financial support to their older parent following parental divorce and remarriage (Hans et al. 2009). Additionally, older adults may receive assistance from neighbors or friends such as meal sharing or unpaid tasks such as running errands (Barker 2002).

Why is Financial Help Needed?

Many older adults often lack the financial resources needed to support their retirement years, whereas others have lacked planning for their retirement needs. For example, about 44 % of workers in their 50s have neither a traditional pension nor a 401(k) with their current employer (US Government Accountability Office 2011b). Additionally, those who have retirement benefits may not be taking full advantage of their benefits (US Government Accountability Office 2011b). The sources and amounts of income available to retirees were negatively affected by the recent recession. Between 2007 and 2009, 62–69 % of Americans aged 45 or older experienced a decline in their wealth. The median rates of wealth decline ranged from 15 to 20 %, amounting to losses ranging from $14,000 to $24,000 (Bricker et al. 2011). The economic well-being of current and future retirees will likely be negatively impacted with many facing reduced retirement security. Older adults also face the risk of outliving their financial assets. Regardless of whether or not older adults outlive their assets, millions continue to experience poverty at older ages (US Government Accountability Office 2011b).

Although lack of resources, retirement planning, or mismanagement of resources are major causes of the need for financial assistance at older ages, recent studies indicated other causes may include individual characteristics or personality traits. These individual characteristics include optimism, risk preference, self-control or more broadly defined personality traits such as conscientious or openness (Brown and Taylor 2011; Duckworth and Weir 2010). Those who have self-control problems accumulated 20 % less wealth than those without self-control problems after taking into consideration individuals’ lifetime earnings (Ameriks et al. 2007).

Personality Traits and Economic Behaviors and Outcomes

Personality traits can be seen in the actions one takes and the decisions one makes. For example, either you are a patient person, or not; a responsible person, or not. Personality traits are relatively enduring personal characteristics that reveal themselves in a particular pattern of human behavior in a variety of situations (Bratton et al. 2007). Personality traits are important predictors of economic outcomes of older adults (Heckman 2011; Borghans et al. 2008). Many economists use the “Big 5” personality inventory, developed by Costa and McCrae (1992) to measure personality. The “Big 5” personality inventory includes (1) openness to experience, (2) conscientiousness, (3) extraversion, (4) agreeableness, and (5) neuroticism. Table 1 provides definitions of the “Big 5” domains including descriptions of the personality traits as related to financial behaviors drawn from the findings of prior studies (Brown et al. 2005, 2008; Brown and Taylor 2011; Duckworth and Weir 2010, 2011; Reis and Gold 1993; Robinson et al. 2010),
Table 1

Personality traits in relation to behaviors

Personality trait

American Psychology Association dictionary description (Heckman 2011, p. 5)

Relation to behaviorsa

Openness to experience

“The tendency to be open to new aesthetic, cultural, or intellectual experiences”

Save less, spend more, higher levels of unsecured debt

Conscientiousness

“The tendency to be organized, responsible, and hardworking”

Save money, plan, goal oriented, spend less, higher lifetime earnings, better able to manage “fixed” retirement income

Extraversion

“An orientation of one’s interests and energies toward the outer world of people and things rather than the inner world of subjective experience; characterized by positive affect and sociability”

Change financial plans after talking to friends/family/colleagues, good support network, higher levels of unsecured debt

Agreeableness

“The tendency to act in a cooperative, unselfish manner”

Accept financial help

Neuroticism

“A chronic level of emotional instability and proneness to psychological distress”

Pessimistic, may put off saving and financial planning, may liquidate assets in times of turmoil, lower lifetime earnings

aBrown et al. (2005, 2008), Brown and Taylor (2011), Duckworth and Weir (2010, 2011), Reis and Gold (1993) and Robinson et al. (2010)

Personality traits are closely related to economic outcomes and behaviors such as earnings and savings (Duckworth and Weir 2010), response to the economic downturn (Duckworth and Weir 2011), financial expectations (Brown et al. 2008), amount of household debt (Brown et al. 2005), and quality of retirement experiences (Robinson et al. 2010). For example, older adults who were more conscientious and emotionally stable had higher lifetime earnings and saved more money over their lifetime as compared with older adults who were less conscientious and emotionally unstable (Duckworth and Weir 2010). Further, during the recent economic recession conscientious older adults saved more and spent less of their income compared to older adults who exhibited higher levels of openness to experience (e.g., adventurous, sophisticated) who saved less and spent more of their income (Duckworth and Weir 2011). Having financially optimistic expectations is positively associated with one’s level of unsecured debt meaning that the more positive thinking individuals are about their finances, the more likely they are to have higher levels of unsecured debt such as credit card debt (Brown et al. 2005) and secured debt such as mortgage debt (Brown et al. 2008). For example, they may sincerely believe they will financially succeed and be able to pay off the debt. Specifically, extraversion and openness to experience influenced household debt levels and assets held, whereas conscientiousness and neuroticism were not influential, suggesting that personality traits have different effects across the various types of debt and assets held (Brown and Taylor 2011).

Extraversion and neuroticism are predictors of life satisfaction for those nearing retirement, whereas agreeableness and conscientiousness are generally associated with greater life satisfaction and positive experiences among those individuals who were already retired (Robinson et al. 2010). This fact may indicate that conscientious retired adults are better able to manage their “fixed” retirement income, whereas extroverted adults close to retirement are more likely to gravitate toward buying experiences because they generally have income from earnings. Extraverted and agreeable older adults generally have a better support network in retirement and therefore enhanced life satisfaction in retirement (Reis and Gold 1993). Regarding gender, women are more likely than men to exhibit higher levels of neuroticism and agreeableness and these differences generally remain constant across the lifecycle (Chapman et al. 2007).

Personality is a critical factor that can help explain and predict the economic behaviors and outcomes of older adults. Many “existing studies have generally focused on one particular aspect of an individual’s personality such as optimism or attitudes towards risk” (Brown and Taylor 2011, p. 4). Other studies focused on quality of retirement life (Robinson et al. 2010) or lifetime savings (Duckworth and Weir 2010). Whereas saving, spending, and investing involves financial decision making, these studies did not take into account the role of personality traits in financial help decision making. Specifically, we examine personality traits based on the “Big 5” and focus on the role of personality traits in an older adult’s decision to receive financial help from varying sources. Given the increasing financial vulnerability of many older adults and reliance on varying sources of financial assistance for support, it is important to understand how personality traits can influence the decision to receive financial help and the funding source.

Theoretical Framework

Life cycle theory and psychological cost can provide insights to explain how personality traits predict help-seeking behaviors. Life cycle theory assumes people save and borrow to smooth consumption over the life cycle. Saving occurs when current income is higher than spending. In contrast, the theory expects dissaving or borrowing when current income is not enough to meet consumption needs. Lack of earning power or unexpected events such as a job loss or health problems can lead to dissaving or borrowing. To counter the effects of lack of earnings and a decline in current income amounts, individuals may use their savings for current consumption needs or borrow money when savings are inadequate. When faced with a borrowing constraint, individuals can ask for financial help from their family or friends and public programs.

Benefits (i.e., utility) and costs (i.e., disutility) are linked with help-seeking behavior. The benefits of financial help-seeking include maintaining consumption levels and decreasing psychological stress from current lack of resources. However, the costs of help-seeking may not be small. The financial cost to ask for help may be minimal ranging from making phone calls to incurring expenses for visiting family or government offices to apply for assistance. However, the psychological cost may be significant. Those who seek help may feel shame or stigma (Moffitt 1983) and be uncomfortable with discussing their current financial situation with other people (Vogel and Wester 2003). The psychological theories of help-seeking also explain major psychological costs that discourage help-seeking (Fisher et al. 1983) such as threatening freedom and autonomy (reactance theory) or self-esteem (threats-to-self-esteem), and blaming themselves rather than the external environment (attribution theory) (Kelley 1967).

Help-seeking behaviors are fundamentally interpersonal and involve more than one person; in the act of seeking help, one person searches for another to provide assistance and relief (Lee 1997). Help-seeking behavior is operationally defined as an action by an individual to seek and use assistance from a secondary source (Grable and Joo 1999). People weigh the benefits and costs of help-seeking decisions. When the benefits outweigh the costs of help-seeking, people seek help. Once the benefits of help-seeking are given, help-seeking is more likely when people perceive lower psychological cost from help-seeking. In other words, help-seeking may occur more frequently for people who are less sensitive to the causes of psychological costs such as stigma, self-disclosure, freedom and autonomy, or self-esteem.

Personality provides an explanation regarding why people have different perceptions of the causes of psychological costs. Personality is a relatively enduring pattern of thoughts, feelings, motives, and behaviors unique to each individual and determines how we perceive and response to the environment differently (McCrae and John 1992). Personality has been described with the “Big 5” personality traits, which include five domains of personality constructs: openness to experience, conscientiousness, extraversion, agreeableness, and neuroticism (McCrae and John 1992). Next, an explanation of how each of the five personality traits is related to causes of psychological costs associated with financial help-seeking is included, and then predictions regarding the relationships between personality traits and help-seeking are discussed.

Extraversion is an orientation of one’s interests and energies toward the outer world of people and things rather than the inner world of subjective experience (Heckman 2011). Extraverted individuals tend to have positive emotions and outgoing personalities (McCrae and John 1992). When confronting financial difficulties, extraversion may allow people to mitigate blaming themselves, and feeling stigma or inequity from help. Thus psychological costs from these negative feelings decrease, leading to less resistance to help-seeking. In the financial help-seeking domain, extraverted older adults have higher levels of unsecured debt (Brown et al. 2005; Brown and Taylor 2011). However, they may change their financial plans after consulting with family, friends, or colleagues (Reis and Gold 1993), and have a better support network of friends and family (Reis and Gold 1993). Based on this, we hypothesize that extraversion is positively related to financial help-seeking.

Openness to experience describes the tendency to be open to new aesthetic, cultural, or intellectual experiences (Heckman 2011). Individuals with more openness to experience have a variety of interests and unusual or unconventional thoughts. More closed individuals by contrast are likely use judgment based on conventional terms and favor conservative values (McCrae and John 1992). Regarding personal finance activities, older adults who exhibit higher levels of openness may save less and spend more resulting in higher levels of unsecured debt (Duckworth and Weir 2011). This can increase help-seeking needs. When confronting help-seeking situations, those with openness to experience are more open to help-seeking because they are less sensitive to self-disclosure, leading to less psychological cost being perceived. Based on this, we hypothesize that open to experience is positively related to financial help-seeking.

Conscientiousness is the tendency to be organized, responsible, and hardworking (Heckman 2011). This trait reflects two dimensions of a proactive view (i.e., will to achieve by organizing or directing behaviors) and an inhibitive view (i.e., constraint and prudent by holding impulsive behaviors in check) (McCrae and John 1992). Individuals with this trait are less likely to experience situations of help-seeking, and more likely to avoid help-seeking due to high psychological cost from potentially damaging self-esteem resulting from help-seeking. Conscientious older adults may save money because of having higher lifetime earnings and reduced spending (Duckworth and Weir 2010; Duckworth and Weir 2011), have established a financial plan including financial goals, and be better able to manage their retirement years on a fixed income. Based on this, we hypothesize that conscientiousness is negatively related to financial help-seeking.

Agreeableness is the tendency to act in a cooperative and unselfish manner (Heckman 2011). A higher level of agreeableness represents friendly compliance rather than hostile noncompliance and antagonism (McCrae and John 1992). This trait can contribute to decreasing psychological cost particularly due to damaging freedom and autonomy from help-seeking. Thus, agreeable older adults are more likely willing to accept financial help specifically if the assistance is offered (Reis and Gold 1993). Based on this, we hypothesize that agreeableness is positively related to financial help-seeking.

Lastly, neuroticism reflects a chronic level of emotional instability and proneness to psychological distress (Heckman 2011). Neuroticism represents individual differences in the tendency to experience distress and in the cognitive and behavioral styles. Psychological distress is often associated with irrational thinking, low self-esteem, poor control of impulses and cravings and ineffective coping (McCrae and John 1992). Those with high levels of neuroticism are more associated with help-seeking resulting from need. Neurotic older adults may be more likely to have suboptimal decisions related to saving, financial planning, and ultimately retirement planning (Duckworth and Weir 2010; Robinson et al. 2010). Low self-esteem from high levels of neuroticism may mitigate psychological cost from help-seeking. In contrast, irrational thinking and ineffective coping resulting from high levels of neuroticism may hinder help-seeking despite little psychological cost based on low self-esteem. Thus, it is not clear whether neuroticism is positively or negatively associated with financial help-seeking behavior. However, previous findings indicate emotional distress is positively related with help-seeking attitudes (Kakhnovets 2011; Komiya et al. 2000). Based on this, we hypothesize that neuroticism is positively related to financial help-seeking.

In sum, we predict (1) a positive relationship between help-seeking and openness to experience, extraversion, agreeableness, and neuroticism, but (2) a negative relationship between help-seeking and conscientiousness.

Methods

Data

Data from the Health and Retirement Study (HRS) are utilized. The HRS is a national longitudinal study of the economic and health status of older Americans. The HRS added a self-administered questionnaire (Leave-Behind Questionnaire) in 2004, which was left with respondents upon the completion of a face-to-face interview. The Psychosocial Leave-Behind Participant Lifestyle Questionnaire added measurements of personality in 2006. The revised and updated version of the Psychosocial Leave-Behind Participant Lifestyle Questionnaire that was administered in 2006 and 2008 is used in this research. Half the sample (chosen at random) was given the questionnaire in 2006 and the other half in 2008. For this study, to increase sample size a combined data set was created using the 2006 and 2008 waves and the variables from the respective wave for each subject. After accounting for missing data and selecting non-missing respondents, the final sample consists of 12,895 older adults.

Measures

Financial Help

The dependent variables are the receipt of financial help (1 if received financial help; otherwise 0) and the sources of financial help. The sources of financial help were classified as (1) received financial help at the individual level (1 if had home equity loan or unsecured debt; otherwise 0); (2) received financial help from family (1 if received monetary assistance from family members; otherwise 0); and (3) received financial help from public assistance (1 if received Medicaid, SSI, Welfare or Food stamps; otherwise 0).

Personality Traits

The “Big 5” measures of personality traits include neuroticism, extraversion, agreeableness, conscientiousness, and openness to experience. A four-point scale was used (1 = not, 2 = a little, 3 = some, and 4 = a lot). The scores for the adjective markers within each sub-dimension were averaged. Neuroticism included four adjective markers: moody, worrying, nervous, and calm (reversed). Extraversion included five adjective markers: outgoing, friendly, lively, active, and talkative. Agreeableness included five adjective markers: helpful, warm, caring, softhearted, and sympathetic. Conscientiousness included five adjective markers: organized, responsible, hardworking, careless (reversed), and thorough. Openness to experience included seven adjective markers: creative, imaginative, intelligent, curious, broad-minded, sophisticated, and adventurous.

Demographic Characteristics

Characteristics of older adults who receive financial help have been well documented including women, minorities, the less-educated, single persons, the unhealthy, and those over age 80 (Federal Interagency Forum on Aging-Related Statistics 2010; Munnell 2004; Hershey and Jacobs-Lawson 2012). Based on prior research, demographic characteristics included age (years), education (years), race/ethnicity (a categorical variable of Blacks, Hispanics, others, or Whites as the reference group), marital status (a categorical variable of divorced/separated = 2, widowed = 3, never married = 4, or married = 1 as the reference group), geographic region (urban = 1) and self-rated health status (poor = 1) as control variables.

Economic Characteristics

Economic characteristics included income in US dollars and wealth in US dollars; 2006 US dollar amounts were adjusted to 2008 values.

The logarithms of income and wealth values were used due to presence of outliers. Employment status (a categorical variable of retired = 2, homemaker = 3, disabled = 4, unemployed and looking for work = 5, temporarily laid off, on sick leave or other leave = 6, or employed = 1 as the reference group) was also included.

Analyses

Three sets of probit analyses were conducted. First, a probit regression was used to estimate the effect of personality traits on whether financial help was received from any source. Second, three individual probit regressions were used to estimate the effect of personality traits on the three sources (individual, family, and public) of financial help as dependent variables. Third, a multivariate probit regression was conducted to jointly estimate three probit regressions to test potential correlations among the three sources of financial help (Greene 1993).

When older adults seek help, they may be influenced by available sources or associated psychological cost. For example, if family help is available, some may not seek help from public sources. If more than one source is available, they may choose a specific source of help based on psychological cost of perceived stigma. The perceived level of stigma is not observed in this study but simultaneously affects choices among financial help sources. This fact means that decisions to choose help-seeking sources influence each other and are influenced, thus requiring that we address these correlations in estimation.

We tested whether the multivariate probit model fit the data better than three separate probit models. In practice, from the multivariate probit estimation, we obtained three parameters of covariances (i.e., correlation between individual and family, or family and public represented by rho21, rho31 and rho32 in Table 4) to examine the extent to which the three error terms of each regression are correlated. We then used the three covariances to conduct a likelihood ratio test for all three rhos being a zero or uncorrelated.

Results

Descriptive Analyses

The descriptive statistics for the sample are presented in Table 2. The mean age for the sample was 67 years. The mean educational attainment was high school (12 years). The sample consisted of 59 % females and 41 % males. White (80 %) was the predominant race of the sample. Ninety-three percent of the sample indicated health of excellent, very good, good, or fair, whereas 7 % were in poor health. Sixty-five percent of the sample was married, whereas 13 % were divorced or separated, 19 % were widowed, and 3 % were never married. Thirty-three percent of the sample was employed, almost 50 % were retired, 6 % were homemakers, 10 % were disabled, 2 % were unemployed and looking for work, and 1 % was temporarily laid off, on sick leave or other leave. Twenty-three percent of the sample received financial help. Nine percent of the sample received financial help from an individual source, whereas 7 % received financial help from family and 7 % received financial help from public sources. The mean personality trait scores were as follows: neuroticism 2.1, conscientiousness 3.4, extraversion 3.2, agreeableness 3.5, and openness to experience 2.9. The median income was $43,000 and the median wealth was $224,000.
Table 2

Characteristics of the sample (N = 12,895)

Variable

%

Mean

Gender

 Male

41.3

 

 Female

58.7

 

Race

 White

80.1

 

 Black

11.3

 

 Hispanic

6.9

 

 Other

1.7

 

Marital status

 Married

64.9

 

 Divorced/separated

12.9

 

 Widowed

19.2

 

 Never married

3.0

 

Health status

 Excellent/very good

42.3

 

 Good/fair

50.6

 

 Poor

7.0

 

Employment status

 Employed

33.3

 

 Retired

49.5

 

 Homemaker

5.6

 

 Disabled

9.5

 

 Unemployed and looking for work

1.5

 

 Temporarily laid off, on sick or other leave

0.6

 

Geographic region

 Urban

67.2

 

 Rural

32.8

 

Received financial help

23.1

 

 Individual

9.2

 

 Family

6.8

 

 Public

7.1

 

Personality traits

 Neuroticism

 

2.1

 Conscientiousness

 

3.4

 Extraversion

 

3.2

 Agreeableness

 

3.5

 Openness

 

2.9

Education (years)

 

12.0

Age (years)

 

68.1

Income ($1,000)

 

70.2

Wealth ($1,000)

 

544.8

Multivariate Analyses

The probit model estimation and probit marginal effects yield interesting results. Table 3 presents the results of the probit analyses for the effects of personality traits on the receipt of financial help holding demographic and economic characteristics constant. The hypotheses regarding neuroticism, agreeableness, and conscientiousness and the receipt of financial help were confirmed. The probability of receiving financial help was higher for neurotic older adults and agreeable older adults while the probability of receiving financial help was lower for conscientious older adults. The probability of receiving financial help was lower for older adults who had more years of education. The probability of receiving financial help was higher for Black and Hispanic older adults and those older adults who reported other race. The probability of receiving financial help was higher for those who had worse health. Older adults who were divorced/separated, widowed, or never married were more likely to receive financial help than those who were married. Females were more likely to receive financial help. The probability of receiving financial help was higher for individuals who were either a homemaker, disabled, or unemployed and looking for work. The probability of receiving financial help was lower for those who had relatively higher amounts of income or wealth.
Table 3

Results of probit: effects of demographic characteristics, economic characteristics, and personality traits on receipt of financial help (N = 12,895)

Variable

Received financial help

 

Coeff. (SE)

Marginal effect

Age (years)

−0.0002 (0.000)

−0.00003

Years of education

−0.021 (0.004)***

−0.004***

Race

 Black

0.476 (0.042)***

0.116***

 Hispanic

0.496 (0.052)***

0.012***

 Other

0.428 (0.102)***

0.106***

Poor health

0.303 (0.034)***

0.065***

Marital status

 Divorced/separated

0.390 (0.043)***

0.091***

 Widowed

0.316 (0.039)***

0.070***

 Never married

0.406 (0.079)***

0.099***

Female

0.084 (0.034)*

0.016*

Employment status

 Retired

0.068 (0.037)

0.014

 Homemaker

0.815 (0.061)***

0.230***

 Disabled

0.186 (0.056)**

0.040**

 Unemployed and looking for work

0.532 (0.103)***

0.138***

 Temporarily laid off, on sick or other leave

0.362 (0.201)

0.088

Urban

0.215 (0.036)

0.004

Personality traits

 Neuroticism

0.927 (0.025)***

0.018***

 Conscientiousness

−0.186 (0.034)***

−0.037***

 Extraversion

0.257 (0.037)

0.005

 Agreeableness

0.085 (0.041)*

0.017*

 Openness

0.009 (0.034)

0.002

Log income

−0.063 (0.012)***

−0.012***

Log wealth

−0.043 (0.003)***

−0.009***

Constant

−0.192 (0.205)

 

R2

0.199

 

Log likelihood

−4492.5

 
Table 4 presents the results of the multivariate probit analyses for the effects of personality traits on the receipt of financial help by source along with the individual probit analyses for the effects of personality traits on the receipt of financial help by source holding demographic and economic characteristics constant. The estimated residual correlations (rho21, rho31, and rho32) between sources of financial help are all statistically significant, indicating that decisions to choose sources of help are interrelated but not independent. According to this result, the probits must be estimated as part of a system rather than singularly. The following is a discussion of each financial help source.
Table 4

Results of probit: effects of personality traits on receipt of financial help received by source (N = 12,895)

Variable

Individual

Family

Public

Probit

Multivariate probit

Probit

Multivariate probit

Probit

Multivariate probit

Coeff. (SE)

Coeff. (SE)

Coeff. (SE)

Coeff. (SE)

Coeff (SE)

Coeff. (SE)

Age (years)

0.0003 (0.0003)

0.0003 (0.0003)

−0.00008 (0.0003)

−0.0001 (0.0003)

−0.0002 (0.0005)

−0.0001 (0.004)

Years of education

−0.041 (0.005)***

−0.042 (0.005)***

0.011 (0.003)**

0.010 (0.003)**

−0.062 (0.006)***

−0.043 (0.005)***

Race

 Black

0.525 (0.049)***

0.517 (0.049)***

0.244 (0.050)***

0.244 (0.050)***

0.555 (0.055)***

0.523 (0.052)***

 Hispanic

0.593 (0.059)***

0.565 (0.060)***

0.137 (0.066)*

0.139 (0.066)*

0.567 (0.066)***

0.551 (0.064)***

 Other

0.510 (0.119)***

0.476 (0.121)***

0.168 (0.122)

0.172 (0.121)

0.624 (0.132)***

0.502 (0.131)***

 Poor health

0.370 (0.041)***

0.356 (0.041)***

0.105 (0.042)*

0.105 (0.042)*

0.342 (0.046)***

0.346 (0.044)***

Marital status

 Divorced/separated

0.500 (0.051)***

0.465 (0.051)***

0.180 (0.051)***

0.179 (0.051)***

0.565 (0.059)***

0.487 (0.056)***

 Widowed

0.306 (0.048)***

0.282 (0.048)***

0.266 (0.045)***

0.266 (0.045)***

0.394 (0.054)***

0.377 (0.052)***

 Never married

0.551 (0.090)***

0.512 (0.091)***

0.097 (0.095)

0.096 (0.095)

0.619 (0.101)***

0.486 (0.098)***

Female

0.050 (0.044)

0.024 (0.043)

0.102 (0.040)*

0.101 (0.040)*

0.094 (0.051)

0.036 (0.047)

Employment status

 Retired

0.244 (0.050)***

0.208 (0.049)***

−0.097 (0.041)*

−0.098 (0.041)*

0.589 (0.068)***

0.479 (0.059)***

 Homemaker

1.094 (0.068)***

1.054 (0.067)***

0.062 (0.072)

0.059 (0.072)

1.322 (0.081)***

1.210 (0.075)***

 Disabled

0.513 (0.069)***

0.462 (0.068)***

−0.202 (0.069)**

−0.208 (0.069)**

0.798 (0.084)***

0.682 (0.077)***

 Unemployed and looking for work

0.540 (0.123)***

0.488 (0.122)***

0.455 (0.109)***

0.458 (0.109)***

0.322 (0.172)

0.272 (0.164)

 Temporarily laid off, on sick or other leave

0.415 (0.245)

0.389 (0.222)

0.098 (0.234)

0.105 (0.233)

0.549 (0.282)

0.485 (0.245)

Urban

0.012 (0.045)

−0.0002 (0.045)

0.044 (0.041)

0.043 (0.041)

−0.0003 (0.052)

−0.134 (0.049)

Log income

−0.066 (0.014)***

−0.068 (0.013)***

−0.036 (0.013)**

−0.037 (0.013)**

−0.044 (0.015)**

−0.055 (0.015)***

Log wealth

−0.045 (0.003)***

−0.044 (0.003)***

−0.021 (0.003)***

−0.021 (0.003)***

−0.042 (0.033)***

−0.041 (0.003)***

Personality traits

 Neuroticism

0.094 (0.031)**

0.095 (0.031)***

0.031 (0.030)

0.033 (0.030)

0.070 (0.036)

0.069 (0.034)*

 Conscientiousness

−0.147 (0.045)**

−0.160 (0.045)*

−0.143 (0.043)**

−0.144 (0.043)**

−0.179 (0.051)***

−0.185 (0.048)***

 Extraversion

0.104 (0.046)*

0.099 (0.050)

−0.056 (0.042)

−0.057 (0.042)

0.072 (0.052)

0.071 (0.050)

 Agreeableness

−0.033 (0.050)

−0.015 (0.042)

0.171 (0.049)***

0.173 (0.049)***

0.061 (0.058)

0.082 (0.054)

 Openness

−0.040 (0.042)

−0.042 (0.242)

0.056 (0.040)

0.056 (0.040)

−0.079 (0.048)

−0.065 (0.045)

Constant

−0.399 (0.244)

−0.348 (0.242)

−1.382 (0.239)

−1.367 (0.239)***

−0.908 (0.281)

−0.917 (0.264)**

Log likelihood

−2782.9

−7141.6

    

R2

0.303

     

rho21

 

0.095 (0.025)***

    

rho31

 

0.856 (0.009)***

    

rho32

 

0.103 (0.027)***

    

Note Likelihood ratio test H0: rho21 = rho31 = rho32 = 0, χ(3)2 = 1773.94, p = 0.000

Omitted categories include: white, good (very good and excellent) health, married, male, employed, and rural

p < 0.05; ** p < 0.01; *** p < 0.001

Individual Source

The hypotheses regarding neuroticism, extraversion, and conscientiousness on the receipt of financial help were confirmed. Neurotic older adults were more likely to receive financial help and conscientious older adults were less likely to receive financial help. The probability of receiving financial help was lower for older adults who had more years of education. The probability of receiving financial help was higher for Black and Hispanic older adults and older adults who reported other race. The probability of receiving financial help was higher for older adults who had worse health. Compared to married older adults, those who were divorced/separated, widowed, or never married were more likely to receive financial help. Similarly, the probability of receiving financial help was relatively higher for those who were retired, a homemaker, disable, or unemployed and looking for work. In contrast, the probability of receiving financial help was lower for those having higher amounts of income or wealth.

Family Source

The hypotheses regarding the effects of conscientiousness and agreeableness on the receipt of financial help were confirmed. Conscientious older adults were less likely to receive financial help. Agreeable older adults were more likely to receive financial help. The probability of receiving financial help was lower for those having more years of education. The probability of receiving financial help was higher for Black and Hispanic older adults. The probability of receiving financial help was higher for those having poor health. Older adults who were divorced/separated or widowed were more likely to receive financial help than those who were married. Females were more likely to receive financial help. The probability of receiving financial help was higher for those who were retired, disabled, or unemployed and looking for work. The probability of receiving financial help was lower for those having relatively higher amounts of income or wealth.

Public Source

The hypothesis regarding the effect of conscientiousness on the receipt of financial help was confirmed. Conscientious older adults were less likely to receive financial help. Neurotic older adults were more likely to receive financial help. Similar to the other sources of financial help, having more years of education lowered the probability of receiving financial help from a public source. The probability of receiving financial help was higher for Black and Hispanic older adults and older adults who reported other race. The probability of receiving financial help was higher for those having poor health. Compared to married older adults, older adults who were divorced/separated, widowed, or never married were more likely to receive financial help. Being retired, a homemaker, or disabled increased the probability of receiving financial help. The probability of receiving financial help was lower for those having relatively higher amounts of income or wealth.

Discussion

Using the 2006 and 2008 waves of HRS data, this study expanded the literature on the effects of personality traits on the receipt of financial help among older adults. Specifically, we investigated (1) how the five domains of personality traits (openness to experience, conscientiousness, extraversion, agreeableness, and neuroticism) are associated with the receipt of financial help among older adults and (2) the relationship between the personality traits and the sources of financial help received. The results indicate that personality traits can predict the receipt of financial help and the source of financial help.

Major findings on the association between personality traits and the receipt of financial help are a positive relationship with agreeableness and neuroticism, but a negative relationship with conscientiousness. Agreeableness represents friendly compliance and can decrease psychological cost coming from potentially damaged autonomy by help-seeking. Therefore, the positive relationship between agreeableness and receiving financial help are confirmed as predicted. Agreeable older adults are more likely to receive financial help. Older adults with relatively higher levels of neuroticism show less resistance to receiving financial help. Our findings also show that conscientious older adults were less likely to receive financial help at older ages. This finding suggests that conscientious older adults may have less financial need as well as more resistance to help-seeking due to being more sensitive to psychological cost of stigma or freedom. Previous research found that conscientious older adults were more likely to have savings and higher lifetime earnings (Duckworth and Weir 2010).

In addition, there are also some important findings about the relationship between personality traits and the sources of financial help. Older adults who had relatively higher levels of neuroticism were more likely to receive financial help from individual sources (e.g., credit card debt). Although we did not predict any relationships on specific help sources, this finding is noteworthy. Given that neuroticism reflects emotional instability and proneness to psychological distress, older adults with relatively higher levels of neuroticism may be more likely to have personal debt in later years. Agreeable older adults were more likely to receive financial help from family members. Agreeable older adults tended to have a better support network in retirement (Reis and Gold 1993). The higher probability of agreeable older adults receiving financial help from family members may be indicative of their support network. However, conscientious older adults were less likely to receive financial help from any source. This finding is consistent with whether to receive financial help or not.

Lastly, it is worthwhile to address findings on gender. Females were more likely to receive financial help. Previous research indicated that females were more likely to need financial help at older ages compared to males often due to longevity (Munnell 2004). Additionally, in general, married women tend to outlive their husbands. We also found that females were more likely to receive financial help from family members. Prior research found that older mothers were more likely than older fathers to receive financial help from their adult children (Henretta et al. 2011).

These findings have important implications for researchers, practitioners (financial counseling, planning and education professions, or public assistance program directors), and policy makers. First, our findings indicate that personal traits could be one important factor in older adults’ decision making in financial help-seeking. Thus, further research to examine financial help-seeking behaviors in later years should take into account individual personality traits. Previous studies emphasized major causes of financial help-seeking as lack of resources and retirement planning, or mismanagement of resources (US Government Accountability Office 2011b). Whereas these causes can help us understand financial help-seeking behaviors, personality traits can further expand our understating on deep causes of why mismanagement of resources or lack of retirement planning. It can also control additional heterogeneity of individuals, leading to unbiased estimation results.

Second, for practitioners, our findings can provide invaluable insights for advising and interventions based on unique personality traits for older adults who need financial help. Results show that conscientious older adults are less likely to seek help, in particular from public sources. This finding can be useful to outreach efforts in governments and organizations such as churches or other nonprofit agencies that often provide free resources to low-income populations. For example, 27 % of non-recipients of food stamps who are currently eligible said they would not apply even though they knew they were eligible (US Department of Agriculture 2012). This phenomenon could be attributed to negative stigmas associated with public assistance, but the individual perception of stigma could differ according to one’s personality traits. Conscientious people may love their independence, fear stigma or have very different personal tendencies toward help-seeking. Specifically, conscientious older adults may need to be approached with messages compatible to their personality traits to accept help from public assistance programs when they need help. People may react differently to the same message. Targeting outreach efforts and messages based on personality differences may help practitioners reach potential clients.

Our findings also indicate that those with agreeableness and neuroticism are more likely to seek financial help. Agreeable older adults are more dependent on family as help-seeking source whereas neurotic older adults rely on individual sources like debt. These findings also provide important information for developing or implementing programs for financial assistance. Practitioners may recommend alternative sources or education programs for those who have specific personality traits and depend on debt or family help. For example, neurotic older adults have relatively high level of credit card debt at older ages. Thus, practitioners can advise neurotic individuals to consider public assistance when they need help, and complete financial education on saving and spending even at older ages as well as at younger ages.

Third, from policy perspectives, our findings suggest it is worthwhile to consider whether personality traits are potential tools for informing the development or implementation of government programs. In many cases, government programs attempt to reach low income and underserved populations. The programs include SSI, Medicaid, and assistance for food or housing among others. When promoting programs for specific populations, approaches based on personality traits may lead to better outcomes. For example, agreeable older adults may have a supportive network including family. Family could be an effective channel to reach these populations. Important issues are how to identify individuals’ personality traits and whether this identification is legitimate. In fact, some financial counselors and advisors have utilized measures of individual risk tolerance toward investment, which is a type of personality traits. A first step may be to ask program applicants to voluntarily complete an instrument that will measure their personality traits.

Despite meaningful contributions to the financial help-seeking literature, this study has some limitations and needs further studies. It must be noted that public assistance programs are means tested, available only to those who meet the guidelines. Thus, including public assistance in our study created selection bias. Additionally, although state guidelines vary, qualified individuals would have relatively low income and wealth levels. This research is also limited in that we could not investigate change across the lifecycle. Future researchers may want to consider examining personality traits as related to financial help-seeking across the lifecycle by using longitudinal panel study data. Additionally, future researchers may want to investigate the effect of change in personality.

Copyright information

© Springer Science+Business Media New York 2013