The personality traits of self-made and inherited millionaires

The wealthy significantly influence political and societal processes due to their economic power. Understanding the personality traits that characterize this group is crucial, particularly given rising inequality and its societal impact. This study addresses the question of whether a “rich” personality profile is a consequence of inherited wealth or a factor contributing to self-made wealth accumulation. Previous research has been limited by small, non-representative samples. This study uses a large, representative dataset from the German Socio-Economic Panel (SOEP) to analyze personality traits in relation to wealth, distinguishing between self-made and inherited millionaires. The Big Five personality traits (Neuroticism, Extraversion, Openness, Agreeableness, Conscientiousness), and risk-taking propensity are investigated as potential factors in wealth accumulation. The study uses individual-level net wealth as a more accurate measure of lifetime resources compared to income, particularly at the top of the wealth distribution. The use of individual net wealth, rather than household wealth, is crucial to avoid misrepresenting individual contributions to wealth accumulation. The study's large sample size and population-representativeness offer a robust approach to examining the personality profiles of the wealthy and the reasons for any observed differences from the general population. The study aims to explore two explanations: (1) inheriting wealth shapes personality, and (2) specific personality traits contribute to self-made wealth accumulation.

Existing research links personality traits to various life outcomes and financial behaviors. Conscientiousness and Emotional Stability are associated with job performance, wages, and financial management. Personality plays a role in status attainment and compensating for background disadvantages, creditworthiness, and life event experiences. Risk-taking propensity is an independent predictor of investing, self-employment, entrepreneurship, and company performance. Prior studies often used income as a proxy for wealth, which is less accurate than individual net wealth, particularly for high-wealth individuals who might forgo income for capital gains. Laypersons and scholars alike often distinguish between self-made and inherited wealth, with sociological theories (e.g., Bourdieu's concept of habitus) suggesting socialization influences personality based on class and status. Other research emphasizes personality's role in entrepreneurial success and wealth accumulation, suggesting a possible link between specific personality traits and self-made wealth.

This study utilizes data from two large samples within the German Socio-Economic Panel (SOEP): a general population sample (N=23,721) and a sample of individuals with at least €1 million in individual net wealth (N=1125), representing the top 1.6% of the wealth distribution in Germany. The SOEP is uniquely suited for this study due to its collection of both personality and individual-level wealth data, unlike other surveys. The SOEP data meets four key requirements: (1) use of validated survey instruments for both samples; (2) individual-level data on personality and wealth; (3) significantly larger sample of wealthy individuals compared to previous studies; (4) population representativeness. The SOEP-P subsample, added in 2019, oversamples wealthy individuals, enabling a robust analysis. The data underwent comprehensive quality checks and consistency measures to ensure reliability. The study uses the BFI-S (short Big Five Inventory) to assess personality traits, and a self-rated risk-taking scale. Socio-demographic controls (gender, age category, high education) are included. Wealth is determined by individual net worth, summing assets (owner-occupied housing, rental property, financial assets, etc.) and subtracting liabilities (mortgages, debts, etc.). Individuals were categorized into three groups: self-made millionaires (wealth primarily due to entrepreneurship/self-employment), inherited millionaires (wealth primarily due to gifts/inheritances/marriage), and a mixed/unspecified group. The criteria for these classifications were based on self-reported influence factors on wealth accumulation using a Likert scale. A prototypical personality profile of the rich was constructed based on previous research and hypothesized to be high in Extraversion, Openness, Conscientiousness, and Risk Tolerance and low in Neuroticism and Agreeableness. A difference score from this prototype was calculated for each individual to measure personality distance from the prototype. Statistical analyses included Welch's t-tests, OLS regressions, and analyses of predictive margins to compare the personality profiles of different groups (rich vs. non-rich, self-made vs. inherited, etc.).

The study found significant differences in personality profiles between the rich and the general population. Rich individuals scored substantially higher on Risk Tolerance, Openness, Extraversion, and Conscientiousness, and lower on Neuroticism. These findings were robust across various statistical analyses. The study further examined whether these differences were driven by inherited wealth or self-made success. Rich self-made millionaires exhibited the most pronounced “rich” personality profile, showing the highest levels of Risk Tolerance, Openness, Extraversion, and Conscientiousness and the lowest levels of Neuroticism. Inherited millionaires showed the least pronounced profile. Non-rich self-made individuals also displayed a similar, albeit less pronounced, “rich” personality profile. These findings are supported by analyses of distance from the prototypical personality profile. The distance analysis indicated that rich self-made millionaires were closest to the prototypical profile, followed by the mixed/unspecified group, and then inherited millionaires. Non-rich self-made individuals were closer to the prototypical profile than non-rich inherited or mixed/unspecified individuals. Finally, within the group of rich self-made millionaires, higher wealth was associated with a closer resemblance to the prototypical personality profile, particularly higher Risk Tolerance.

The findings provide strong evidence for a unique personality profile associated with high wealth. Crucially, the study suggests that this personality profile is more strongly linked to self-made wealth accumulation than to inherited wealth. The pronounced “rich” personality profile among self-made millionaires supports the hypothesis that these traits contribute to economic success. This does not imply a direct causal relationship, as other factors influence wealth accumulation. However, the consistent findings across multiple analyses provide considerable support for the notion that a risk-tolerant, open, extraverted, and conscientious personality enhances the likelihood of becoming a self-made millionaire. The similarities between non-rich self-made individuals and the prototypical profile suggest that these personality traits might be necessary, but not sufficient, for high wealth accumulation. The study's implications extend beyond understanding wealth accumulation; the personality traits of the wealthy influence their decisions in politics, business, and society. The study highlights the importance of considering the potential implications of risk-tolerant decision-making by influential individuals, who may take risks that disproportionately affect the general population.

This study provides robust evidence for a distinct personality profile among wealthy individuals in Germany, particularly self-made millionaires. High risk tolerance, openness, extraversion, and conscientiousness, coupled with low neuroticism, appear to be key traits contributing to self-made wealth accumulation. The findings suggest a strong link between personality and economic success, but acknowledge the influence of other factors. Future research should explore the generalizability of these findings to other countries and investigate the causal link between personality traits and wealth accumulation using longitudinal studies.

While the study uses large, representative samples, the findings are limited to Germany. Cultural and societal differences might influence personality traits and limit the generalizability to other countries. The use of self-report data for wealth origin (self-made vs. inherited) introduces subjectivity; however, the consistency of results across different analyses mitigates this concern. The cross-sectional nature of the data only allows for suggestive, rather than conclusive, evidence regarding the causal relationship between personality and wealth accumulation. Longitudinal studies would be needed to fully establish causality. Further research could explore the interaction of personality with other factors such as social capital, access to resources, and luck in driving wealth outcomes.