Income, personality, and subjective financial well-being: the role of gender in their genetic and environmental relationships

Abstract

Increasing levels of financial inequality prompt questions about the relationship between income and well-being. Using a twins sample from the Survey of Midlife Development in the U. S. and controlling for personality as core self-evaluations (CSE), we found that men, but not women, had higher subjective financial well-being (SFWB) when they had higher incomes. This relationship was due to 'unshared environmental' factors rather than genes, suggesting that the effect of income on SFWB is driven by unique experiences among men. Further, for women and men, we found that CSE influenced income and SFWB, and that both genetic and environmental factors explained this relationship. Given the relatively small and male-specific relationship between income and SFWB, and the determination of both income and SFWB by personality, we propose that policy makers focus on malleable factors beyond merely income in order to increase SFWB, including financial education and building self-regulatory capacity.

Keywords: core self evaluations; gender; income; structural equation modelling; subjective financial well-being; survey of midlife development in the U. S..

FIGURE 1

Multivariate multi-group structural equation model for core self-evaluations (CSE), income and subjective financial well-being (SFWB). This figure displays a partial diagram with additive genetic factors (A1, A2, and A3) and unique environmental factors (E1, E2, and E3) for one twin only. Shared environmental factors (C1–C3) are not modeled because univariate analyses show that their influences are not significant. For simplicity purposes, control variables are not shown in the figure. CSE and SFWB are measured as latent variables with multiple indicators.

FIGURE 2

Results of multivariate analysis for males and females. Unstandardized path coefficients with their standard errors (in parentheses) are reported. For simplicity purposes, control variables are not shown. CSE and SFWB are measured as latent variables with multiple indicators. ^∗p < 0.05, ^∗∗p < 0.01, ^∗∗∗p < 0.001.