The Effect of Income and Wealth on Behavioral Strategies, Personality Traits, and Preferences

Abstract

Individuals living in either harsh or favorable environments display well-documented psychological and behavioral differences. For example, people in favorable environments tend to be more future-oriented, trust strangers more, and have more explorative preferences. To account for such differences, psychologists have turned to evolutionary biology and behavioral ecology, in particular, the literature on life-history theory and pace-of-life syndrome. However, critics have found that the theoretical foundations of these approaches are fragile and that differences in life expectancy cannot explain vast psychological and behavioral differences. In this article, we build on the theory of optimal resource allocation to propose an alternative framework. We hypothesize that the quantity of resources available, such as income, has downstream consequences on psychological traits, leading to the emergence of behavioral syndromes. We show that more resources lead to more long-term orientation, more tolerance of variance, and more investment in low marginal-benefit needs. At the behavioral level, this translates, among others, into more large-scale cooperation, more investment in health, and more exploration. These individual-level differences in behavior, in turn, account for cultural phenomena such as puritanism, authoritarianism, and innovation.