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Evidence from mass-transactional data that chaotic spending behaviour precedes consumer financial distress [pre-print]
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Muggleton, Naomi K., Quispe-Torreblanca, Edika G., Leake, David, Gathergood, John and Stewart, Neil (2020) Evidence from mass-transactional data that chaotic spending behaviour precedes consumer financial distress [pre-print]. Working Paper. Society for the Improvement of Psychological Science (SIPS) ; Center for Open Science (COS). (Unpublished)
An open access version can be found in:
Official URL: https://doi.org/10.31234/osf.io/qabgm
Abstract
The prevalence of digital footprints can allow researchers to study the personalities of millions of individuals with improved ecological validity. We present spending entropy as a candidate personality trait derived as a feature of an objective big data source---mass-transactional data from millions of bank accounts. Entropy measures the unpredictability of spending and acts as a measure of the chaotic nature of a person's life. Over and above how much money people spend, and what the money is spent on, spending entropy positively relates to future financial distress. High entropy leads to increased probability of missed payments across financial products. Entropy temporally relates to future distress three months ahead including more severe measures of distress. We replicate our findings in personal current account, loan, and mortgage holders in a second financial institution. Our findings suggest that high-dimensional data can be used to build psychological traits that predict outcomes in novel situations.
Item Type: | Working or Discussion Paper (Working Paper) | ||||||
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Divisions: | Faculty of Social Sciences > Warwick Business School > Behavioural Science Faculty of Social Sciences > Warwick Business School |
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Journal or Publication Title: | PsyArXiv | ||||||
Publisher: | Society for the Improvement of Psychological Science (SIPS) ; Center for Open Science (COS) | ||||||
Official Date: | 10 May 2020 | ||||||
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Institution: | University of Warwick | ||||||
Status: | Not Peer Reviewed | ||||||
Publication Status: | Unpublished | ||||||
Access rights to Published version: | Open Access (Creative Commons) | ||||||
Open Access Version: |
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