Antecedents of indebtedness for low-income consumers: the mediating role of materialism

Abstract

Purpose The purpose of this is to propose a model in which materialism is a mediator of the effects of self-esteem, impulsiveness, attitude toward debt, attitude toward credit card and economic vulnerability on consumer indebtedness. The effects of financial knowledge, financial ability, credit card use and demographic variables are also taken into account. Design/methodology/approach Survey data from a sample of 1,245 low-income consumers from Brazil were used to test the hypotheses using structural equation modeling. Findings First, materialism has a significant effect on consumer indebtedness; at the same time, it is influenced by self-esteem, impulsiveness and attitude toward debt. Second, materialism acts as a mediator, e.g. higher impulsiveness triggers materialism, which influences debt level. Third, indebtedness is higher for women and those who use a higher number of credit cards and are more educated. Social implications Financial education programs should work to increase individual’s perceived ability to manage money, as the individuals who feel less able to manage their personal finances alone (i.e. lower financial ability) presented higher indebtedness. Originality/value This study investigates consumer indebtedness by addressing factors that have been analyzed independently in the literature. The research combines psychological, financial and economic factors with credit card use and demographic variables to explain consumer indebtedness. Moreover, the study supports the mediating role of materialism for the antecedents of consumer indebtedness, e.g. impulsiveness and attitude toward debt.

Debt and Overindebtedness: Psychological Evidence and its Policy Implications

“…Although it is likely that some aspects of debt psychology are the same regardless of the economic system and level of development of a society, others may not be, so extrapolation to other kinds of economy requires caution. Uncertainty on this issue is alleviated by the fact that research in countries at an emerging level of development is increasingly available (e.g., Amit et al., 2020; de Matos et al., 2019), and so far its results tend to parallel those found in countries with more fully modernized economies.…”

“…Attitudes, by definition, are more mutable, and so might be better targets for policy. Both general attitudes, and specifically financial ones, have been linked to risk of debt, including lack of self‐efficacy (Farrell et al., 2016), positive risk preference (S. Brown et al., 2013), overoptimism (Seaward & Kemp, 2000), materialism (e.g., de Matos et al., 2019; Gardarsdottir & Dittmar, 2012; for review, see Kasser, 2016), greed (Seuntjens et al., 2016), reluctance to spend from savings (Sussman & O'Brien, 2016), and specific attitudes to debt and credit (Awanis & Cui, 2016; Chien & Devaney, 2001; Hayhoe et al., 2000; Lea et al., 1993, 1995). These disparate attitudinal factors offer differing scope for policy intervention, but some at least seem to hold some promise.…”

Materyalizm ve Tüketici Uzmanlığının Reklamlara Yönelik Tutumlara Etkisi: Alt Gelir Grubu Tüketiciler Üzerine Bir Araştırma

“…Materyalist tüketim davranışında tüketicilerin fiyat hassasiyeti azalmaktadır (Lembet, 2014). Hatta materyalist değerleri yüksek olan tüketiciler arzu ettikleri harcamaları yapabilmek için daha fazla borçlanma eğilimi sergilemektedirler (Budiner, Matos, Rohden ve Ponchio, 2019;Matos, Vieira, Bonfanti ve Mette, 2019;Watson, 2003). Materyalizm, tüketici davranışlarını sosyolojik açıdan da etkilemektedir.…”

Materialism and Individuals’ Over-indebtedness: A Case of Indonesia

“…Over-indebtedness has received ample of attention of scholars for years. For instance, over-indebtedness is associated with individual differences such as materialism, self-esteem, and impulsiveness [4]. Gathergood and Weber [5] also found that over-indebtedness is caused by the failure to control oneself and the lack of financial literacy.…”

“…Gathergood and Weber [5] also found that over-indebtedness is caused by the failure to control oneself and the lack of financial literacy. Although literature has discussed the impact of individual differences on overindebtedness, most studies only focused on the main predictors of over-indebtedness, and not necessarily discussed the mediating factors that may explicate the mechanism of the relationship [4].…”