Individual Differences and the Repayment of High- and Low-Consequences Debt: Replication and Extension

We replicate the results of a previous study about the effect of intelligence and financial resources on the repayment of High- and Low-Consequence Debts (HCD and LCD, respectively), and extend the scope of the individual differences that are examined to include personality characteristics, and particularly the big-five personality dimensions. Our results from the first study are replicated showing that intelligence is more strongly (negatively) related to HCD repayment difficulty than to LCD repayment difficulty, whereas financial resources tend to be more strongly (negatively) related to LCD repayment difficulty than to HCD repayment difficulty. We also find that personality has a stronger effect on HCD than LCD repayment difficulties. These results are explained by the positive relationship between involvement and quality of financial decision-making in general, and debt-taking decisions in particular. The relationships between the big five and HCD and LCD payment difficulties are also explained by the relationship between involvement and decision quality. Of special interest in this set of findings were the more positive [negative] effect of conscientiousness [neuroticism] on the repayment of HCD [LCD]. These results are consistent with the idea that the self-discipline and deliberation associated with conscientiousness on the one hand, and impulsivity and emotionality associated with neuroticism on the other hand, affect people’s debt-taking decision making.