Wednesday, August 10, 2022

Keep discretionary expenses to things that suit your personality


Nick Maggiulli's Just Keep Buying was highly recommended by friends and some readers of this blog and I enjoyed the book immensely. While the book does not change my approach towards personal finance, it had a great financial perspective. Imagine a mathematics textbook that had the same answers to every standard problem but had such a novel working that it's worth a read.

I'm going to share only point which is gold on selecting the right kind of expenses. Nick Maggiulli really got me when he said that he's not really satisfied with the idea that we should simply buy experiences instead of physical goods. Advice like this cannot possibly apply to the entire population and it is more likely to be biased towards extroverts and ignore the 30% of the population that are introverts who may prefer sleeping in bed than travelling to another country. So he proposes that we splurge on things that is consistent with our own personality makeup.

That's basically all there is from the book. 

But the quest for thought leadership cannot stop at just a raw reading of a non-fictional work. The book has a wonderful reference to a paper by Matz, Gladstone and Stillwell from the University of Cambridge entitled Money buys happiness when spending fits our personality.  

This paper is the true treasure from the book.

Researchers actually paid Amazon Mechanical Turk to imagine what kind of person would buy something, allowing a Big5 personality profile to be mapped to a consumer good. Then researchers found out that folks who buy goods mapped to their personality type had higher levels of personal satisfaction. 

I shall reproduce the mapping here : 

So basically, if you know your personality, you can use this table to guide you on what consumer products would give you the highest personal satisfaction. Buy enough to make yourself happy, then you can invest the rest. So extraverts should be happy attending a music concert with friends. Introverts are happy getting a bonsai plant. So unless the book you are giving is 50 Shades of Grey, expect your extroverted pal to keep it in his KIV list for decades, you might be better off signing him up with a club for swingers.

For me, my toys and hobbies come from my openness to new experiences and now I know that given that I'm not a very agreeable person, doing charity does not really hit the right spot for me, but I can contribute to society by making more videos and speaking to secondary schools since I am an extrovert. 

But try not to read too much into this table - it seems that neurotics should engage in gambling to be happy, and disagreeble assholes have an affinity with traffic fines. 

Maybe if you have two purchases of equal price and you want to make a comparison, buy something that is more consistent with your personality.


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