A new study analyzing real-world betting behavior reveals that individual psychological traits can predict how people handle their money following a win. Researchers found that after a winning day, bettors tend to wager more money and play again sooner, but this tendency is influenced by their intelligence, conscientiousness, and extraversion. The research was published in the Journal of Research in Personality.
Many financial choices are guided by mental shortcuts and emotional impulses rather than by pure logic. One well-documented pattern is the “house money effect,” where a person who has recently won money becomes more willing to take risks. The phenomenon gets its name from the casino environment, where gamblers may feel they are playing with the “house’s” money, not their own, making potential losses feel less significant.
While this effect has been observed in laboratory settings, its operation in the complex environment of real-life financial decisions is less understood. A team of researchers from several Finnish institutions, including the Finnish Institute for Health and Welfare and the University of Turku, sought to investigate this bias using a uniquely comprehensive dataset. They wanted to see if the house money effect appears in actual betting patterns and, more specifically, if stable individual traits like intelligence and personality could moderate a person’s susceptibility to it.
To conduct their analysis, the researchers combined information from three large-scale, independent sources. The first was a year’s worth of anonymized online horse betting data from Finland’s state-owned betting agency, covering every wager made by thousands of individuals. The second was a national administrative registry from Statistics Finland, which provided a range of socioeconomic details for the same people. The third source was data from the Finnish Defence Forces, which administers cognitive ability and personality tests to all male conscripts.
By linking these datasets, the team created a final sample of 11,220 men between the ages of 36 and 54. This approach allowed them to connect objective, real-world betting behavior to psychological traits measured years, or even decades, earlier. The researchers defined the house money effect in two ways: an increase in the amount of money wagered on a given day and a shorter time between betting sessions. They then used statistical models to see if having won on the previous betting day predicted these behaviors.
The analysis first confirmed the presence of the house money effect within this large group of bettors. Individuals who had a net gain on their previous day of betting tended to wager more money on their next session. On average, a win was associated with a 45 percent increase in the amount wagered the next time they played. These bettors also returned to place new bets more quickly, with a prior win shortening the time until the next session by an average of about 16 percent.
The central part of the investigation involved examining how this pattern changed based on individual traits. The models showed that intelligence played a moderating role. For individuals with higher IQ scores, the house money effect was weaker. While they still bet more after a win, the increase was less pronounced compared to those with lower IQ scores. A one standard deviation increase in IQ was associated with a nearly 4 percent reduction in the strength of the effect on bet size.
A similar relationship was found for the personality trait of conscientiousness, which relates to diligence, self-control, and dutifulness. Individuals who scored higher in conscientiousness were less susceptible to the house money effect. Like their high-IQ counterparts, they showed a smaller increase in their betting amounts and a less pronounced hastening of their return to betting after a win.
The personality trait of extraversion showed the opposite relationship. For individuals who scored higher in extraversion, a trait associated with sociability, assertiveness, and reward sensitivity, the house money effect was stronger. These bettors reacted more intensely to a prior day’s win, increasing their wagers by a larger margin than their more introverted peers. A one standard deviation increase in extraversion was linked to a more than 4 percent increase in the strength of the effect on bet size.
The researchers note some limitations to their study. The data on personality and intelligence were collected when the participants were young men serving as conscripts, a significant amount of time before their betting behavior was recorded. The fact that these decades-old measures still predicted behavior speaks to the stability of these traits, but the time gap could have diluted the observed effects. Also, because the psychological data came from the military, the primary sample consisted only of men within a specific age range, so the findings may not generalize to women or to men of other ages.
Future research could explore whether these patterns extend beyond gambling into other domains of decision-making. For example, a successful purchase or investment might create a similar feeling of being “ahead,” potentially influencing subsequent consumer or financial behavior. The findings suggest that psychological traits are not just abstract descriptors but have tangible connections to how people navigate financial risks and rewards in their daily lives. By using large, real-world datasets, this work provides a clearer picture of the interplay between our mind and our money.
The study, “Intelligence, conscientiousness and extraversion moderate the house money effect in real-life financial decision-making,” was authored by Jussi Palomäki, Michael Laakasuo, Sari Castrén, Tuomo Kainulainen, Jani Saastamoinen, and Niko Suhonen.
