One of the Chapter Titles - one of the Big Issues - in the how-to-write books and courses and seminars is Characterisation, and I'm putting capitals all over the place because that's how it feels that aspiring writers talk about it. Whereas when agents and editors and experienced writers talk about it, they just say, 'I love the characters.' And having written that first sentence as a run-in to what I really want to say, I'm realising that it's the abstraction of the idea of characterisation which is daunting for beginner writers, not the process. After all, thinking about how different humans tick is what we all do most of the time, as soon as we enter a room or a world which has other humans in it. Non-writers may not be aware that we've been speaking prose all our lives, or that we emplot our existence as a way of understanding and finding meaning in it, but we all know that we spend an awful lot of time trying to work other people out: what they are, why they're like that, whether they're telling the truth, what they'll do next, what they'll do if we do X.
Indeed, working out how things work is the fundamental nature of childhood, and it's not an accident that so much of the best and/or most popular children's fiction involves the protagonist landing in a strange world, without parents who can or will help, where they have to work out the rules in order to survive: boarding school, space, time travel, shipwreck, being orphaned, evacuation, or anywhere with magic or science which operates differently from the known world. The experience of working it out, and eventually understanding if not altogether mastering that world, embodies a child's experience of the real world. And not just children, either: I write as one who's just started reading Robinson Crusoe.
So I don't think it goes without saying that the best way to develop your characters and write your novel is to work them out in detail beforehand, but you wouldn't think that to read some of the how-to books. I even know of a writing teacher who hands out questionnaires to all her students: what does the main character wear/drink/drive, what do they think/feel/see/understand about all sorts of things? What's their middle name, their taste in garden ornaments, their star sign? (I'm trying not to snort derisorily here, though of course one of your characters might believe in astrology.) Some of the students probably find this useful, if only as something to cling to in a sea of possibilities, but I know don't. I tried it dutifully for an early novel, and no doubt the pages are gathering dust somewhere, along with the Christmas Present Five Year Diaries (with lock and key) which are filled in for the first two weeks. To me - and I'd never say this is how you should see it - it all reads like a pop psychology piece in a glossy magazine: "My father always said that... so I grew up being very... but then... and eventually..." To me, it's unhelpful because drama is essentially character-in-action, and this is all character and no action. A story based on it is likely to be all analysis and reflection, with illustrative moments as a substitute for real drama.
Having said that, of course, one driving force for the imagination in shaping a novel - may even be the origin of the novel - is the "What if?" which goes, for example, "What if you were that kind of person and had that sort of marriage, and then she died?" Of course, then you start thinking about how that kind of marriage, and that kind of person, would result in what kind of widowerhood? Character does form action, so of course we need to know what the character is like. A story with all action and no character, with no sense of the action's roots in human nature and desires, is no real drama either.
Simply put, I think you can develop characters from the inside out, or the outside in. Neither is the only right way, and mostly I suspect we all do a mix of both. The two are essentially different, though. If the fundamental nature of drama is character in action, then one starts with the character, and the other with the action.
From the inside out, from the general to the particular, uses your understanding of how people tick to work out what your character would act:
Childhood with very judgemental parents; what does that make her like? She feels judged all the time; what emotions does that rouse? It makes her tense and nervous; how does that show physically? Makes her constantly fiddle with her fingers; what does that make her do? She keeps dropping things: what does she drop this time? She drops the present the new boyfriend gave her. Which is both likely, and symbolic of the fact that she can't even accept a present without thinking that it's in some way a judgement of her, which she doesn't want.
From the outside in, from the particular to the general, discovers the character as we do with real people in real life, moving from how they act towards working out how they tick:
The present was from the new girlfriend: what happened? He dropped it: why? Because he keeps dropping things: why? Because he's always fidgeting: why? Because he's tense and nervous: why? Because he feels the present is a judgement of him: why? Because he had very judgemental parents. Which is both likely and, when he drops it, symbolic of how he doesn't want the judgement that he can't help accepting.
There's an assymetry, of course, in that a novel is built of the particular, and it's the convincingness of the particular which persuades the reader to forget to disbelieve that none of this actually ever happened. So if you're working from the general inside to the particular outside, you need to do a fair bit of working outwards before you start. Whereas outside-to-inside can work itself out as, pen in hand, you ask yourself the particular, "What would she do next?" which will embody this moment's manifestation of the general nature of the character.
In practice, of course, it's not as tidy as all this: we all do both, often not even aware of the change of direction, so well-trained are we by life to move between the two. And there's a lot of other stuff you do need to find out, if not in a questionnaire. But I think the key is to think about them in whatever ways keep character and action both in play. If you do want to think, say, about how characters dress or eat or vote, then think about them in contrast to each other. One person's clothes (or car, or food) say something about them and how they fit themselves into the world. But two people's clothes (or cars or cooking) for the same occasion not only tells the reader that, but also sets up (inter)action between them. Do they see the occasion differently? Do they see the occasion in the same way, but dress/cook for it so differently that the other misreads them? Does each see their own relationship to the occasion differently from what the other sees? It doesn't need to be about politics to bring out the conflict - implicit or explicit - in the situation. It's not that they have to launch into a battle over superiority, only that everything they do in the scene will be coloured by the place they think they have in it, and whether they feel that place is acknowledged, or challenged. So never mind character questionnaires, now the scene's really getting going, and without a word of pop psychology: just clothes, and food, and dropping presents...
