Personal saving orientation is associated with higher likelihood of paying with cash versus credit: The role of financial power signaling

Abstract

Personal saving orientation (PSO) has been identified as a distinct personality trait that affects financial outcomes. Given its importance in peoples' financial decision-making, the current research explores whether PSO also serves as a personal identity that affects consumption-based signaling behavior. It is argued that because high-PSO individuals are motivated to accumulate financial resources, they desire to signal this aspect of their identity to others. However, because financial resources are typically kept in a bank account or in intangible investments, they are not publicly visible. Thus, it is posited that high-PSO individuals pursue other methods to signal financial power to those around them. Specifically, the present research investigates the association between PSO and the payment method that people use in a public consumption setting. Three studies demonstrate that people view paying with cash as a signal of financial power and that, as a result, high-PSO individuals are more likely than low-PSO individuals to pay with cash because they perceive that doing so signals their financial power to others. Supporting this argument, high-PSO individuals report being more likely to pay with cash (vs. credit) than low-PSO individuals in a public consumption setting, but not in a private consumption setting.