Big Shot, or Big Short? Comfort with Borrowing Money by Personality Type

In The Big Short, a banker (played by Steve Carrell) decides to bet against the housing market in 2007 after a stripper in Florida casually tells him she has taken out five mortgages. A few months later, millions of people defaulted on their loans, major lenders went bankrupt or got bailed out by the government, the stock market crashed, and the Great Recession began.

Given this recent history, it probably comes as no surprise that when we asked our community whether they agreed with the statement, “You are comfortable with taking loans from the bank,” two out of three said “No.”

Interestingly, research indicates that many of the people who say they are uncomfortable taking out a loan have done it anyway. According to a 2015 survey from the Pew Charitable Trusts, 80% of Americans have debt. This figure is closer to 90% for younger generations, such as Gen Xers and Millennials.

Why are some people more likely than others to be uncomfortable with debt? Let’s see what a closer look at the data can tell us.

Roles

Analysts, Sentinels, and Explorers (35%, 34%, and 33% agreeing, respectively)

Most Role groups seemed to have little influence on people’s answers. Strong majorities of Analysts, Sentinels, and Explorers all expressed discomfort with the idea of taking out a loan.

Diplomats (29%)

Diplomat personality types were the most uncomfortable with borrowing money. This may be in part because people who process information Intuitively were slightly less likely to be comfortable taking out a loan than more Observant types (31% vs. 34% agreeing). While Observant thinkers can calculate the cold math and take comfort in the concrete opportunities a loan makes possible, Intuitive personality types may be more likely to let their imagination run wild with worst-case scenarios and catastrophes. In the same vein, people with the Feeling trait had more discomfort than Thinking types (31% vs. 35%), possibly because they are more affected by the feelings of anxiety that so often accompany the burden of debt. As Intuitive and Feeling types, Diplomats are more likely to be uncomfortable taking on debt.

Strategies

People Mastery (40% agreeing)

People Masters’ innate confidence may explain why they are the most likely Strategy to feel comfortable taking out a loan. Perhaps they focus on the relationship they’ve built with the person making the loan, rather than the faceless debt collectors who will show up if things go bad. Or perhaps these personalities see debt as a necessary evil – not an enjoyable experience, but one that is required if they want to advance in the world. They also have no doubt that they’ve wrung the best possible deal out of the loan officer. People Masters know that more timid people are afraid of debt, but they aren’t too worried about others’ opinions.

Assertive Debaters (ENTP-A) (44% agreeing) were more likely to be comfortable taking out a loan than any other personality type. The decision to take on debt is always a question of risk versus reward, and in order to make a smart decision, one must acknowledge both sides. Many people are uncomfortable with this uncertainty, but Debaters relish the process of weighing alternatives and questioning their own assumptions. Often, they have done their homework and looked at the decision from every side. The danger for Debater personalities, as always, is that they may be too clever for their own good. The Big Short made this clear by quoting Mark Twain: “It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so.”

Social Engagement (33%)

With their faith in community institutions, Social Engagers are more likely than the Introverted Strategies to see the benefits that banks bring to communities. Instead of suspicion toward Wall Street, these personality types focus on the fair lending practices of the local bank on Main Street. They take satisfaction in the mutual commitment that a loan represents, and recognize that a responsible lender can make money and strengthen the community at the same time.

Social Engagers’ combination of Extraversion and a Turbulent Identity may also make them more prone to “keeping up with the Joneses,” seeking out the latest and greatest in their homes, cars, clothes, and other possessions.

Confident Individualism (30%)

Of all the personality traits a person can possess, being Introverted was most likely to correlate with being uncomfortable taking out a bank loan (27% agreement, compared to 37% for Extraverts). For an Introvert, opening their finances to a banker may feel a lot like sharing their most intimate secrets with a group of strangers. Confident Individualists tend to believe they can make their own way in the world. They don’t need help from others, especially others who want to charge them 6% interest. Confident Individualists will take out a loan if they must, but they certainly don’t have to like it.

Constant Improvement (25%)

Having a Turbulent personality was also correlated with discomfort taking out a loan (29% agreement vs. 36% of Assertive individuals). For someone already prone to stress and anxiety, taking on debt is sure to be a source of sleepless nights. The whole process of meeting with different loan officers, sharing their personal finances so publicly, and having to bargain for a good deal is quite a nightmare for Constant Improvers. They will never be satisfied with their interest rate or even be sure there isn’t a solution that wouldn’t require a loan at all.

Turbulent Mediators (INFP-T) (21% agreeing) were particularly uncomfortable taking out loans. Their idealistic nature may make them distrust banks, and their altruism may lead them to see the loan as an act of selfishness. In general, the calculating world of spreadsheets and finance is simply the last place most Mediator personalities ever want to find themselves.

Turbulent Adventurers (ISFP-T) (22% agreeing) are also highly uncomfortable with taking on a loan. This may be because owing money to a bank is exactly the kind of box that they never want to find themselves in. People with the Adventurer personality type want the freedom to be spontaneous, not the harsh certainty of a monthly debt payment. They’d rather solve a financial problem with a trip to Vegas than a trip to the bank.

Conclusions

Why do so many people do something that makes them uncomfortable? Many feel they don’t have a choice. In the Pew poll, 70% of Americans said that “debt is a necessity.” Their discomfort probably also stems from the sheer size of the loans: according to a study from Nerdwallet, the average U.S. household carries over $130,000 in total debt. With so much money involved, it’s crucial to make wise decisions. And having a good understanding of your personality type can be an important tool. In fact, your comfort level when thinking about taking out a loan may be an indicator of how things will go once you have the money.

Those personality types who are least comfortable taking out a loan may also be the ones least likely to manage their loan effectively. Mediators’ altruism can lead them to give away more than they can afford. And Adventurers have many great qualities, but planning (and saving) for the future is not their strong suit.

Meanwhile, the personalities most comfortable with taking out a loan may be more likely to pay it back on time (or ahead of time). The Debater has looked at every side of the deal to make sure it is a good decision, while the Executive’s (ESTJ, 41% agreeing) belief in responsibility and hard work make it likely they will do whatever it takes to meet the commitment they’ve made.

The world’s economy would be much more stable if we could all approach our finances with cold rationality. But even the most logical personality types still have powerful feelings when it comes to money. Understanding our feelings – and knowing when to ignore those feelings and when to listen to them – can help us make the best decisions.

Is taking out a loan no big deal for you, or does your heart race just thinking about it? Leave us a comment and let us know!

You can see the full set of data, including correlation coefficients, here. Please also consider participating in our Member Surveys!

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