Does perfectionism influence individual financial risk tolerance and financial well-being? Evidence from an online survey data from the US

Abstract

Perfectionism influences various aspects of our lives, such as academic study, music, athletics, and work. Perfectionism has two essential facets: striving and evaluative concerns. The effect of perfectionism on financial domain was rarely examined. This study aims to investigate whether perfectionism influence tolerance for financial risk, wealth accumulation and gambling behavior. We implement a cross-sectional study with an online survey sample of 661 US residents. We conduct OLS, quantile and ordered logistic regressions as well as mediation tests to examine the relationships between the variables of interest. The results suggest three findings. First, perfectionistic striving is positively associated with financial risk tolerance, but perfectionistic concerns have no impact on financial risk tolerance. Second, perfectionistic striving (concerns) positively (negatively) predicts liquid wealth mediated by investment knowledge. Third, perfectionistic concerns inhibit gambling expenditure. This study contributes to theory by documenting that perfectionism can influence financial satisfaction or well-being. The conclusions also have important implication from a policy perspective.