Risk and Consumer Debt Behaviors in China

Abstract

We investigated the risk and debt behaviors of adult consumers in China (N = 347), and explored the relationships among risk perception, risk preference, and consumer debt. The results of hierarchical regression analysis showed that risk perception, risk seeking, and risk aversion can predict consumer debt. Individuals perceiving high levels of risk were less likely to have positive attitudes toward debt behavior, whereas individuals with high risk-seeking preferences held positive attitudes toward debt behavior. Risk aversion was also found to be an ineffective predictor of debt behavior.

On the association of debt attitudes with socioeconomic characteristics and financial behaviors

“…Also noteworthy is the finding that members of the debt pragmatist group have higher odds of reporting internal, lifestyle-related causes of financial problems, as opposed to debt refusers and emergency debtors. This finding aligns with earlier research showing that higher debt tolerance is associated with higher levels of materialism (Dittmar, 2005;Ponchio & Aranha, 2008;Richins & Rudmin, 1994;Watson, 2003;Yeniaras, 2016), higher levels of financial risk-seeking preference (Liao & Liu, 2012) and emotions, such as confidence, doubt, desperation, and distrust, that have been investigated in relation to payday borrowing (Brown & Woodruffe-Burton, 2015). Follow-up research might examine the motivation behind these lifestyle expenses, for example, overconfidence with regard to debt repayment (for a review see Robb et al, 2015) or lack of financial management skills (Antonides, 2011;Moulton et al, 2013).…”

The Hedonics of Debt

“…Social and personality psychologists have mostly studied why people become heavily indebted by focusing on individual differences. In addition to economic circumstances, high levels of debt have been attributed to various individual differences in, for example, considering future consequences ( Lea et al, 1995 ; Joireman et al, 2005 ), intelligence ( Yang and Lester, 2016 ; Ganzach and Amar, 2017 ), impulsivity ( Ottaviani and Vandone, 2011 ), all of the Big 5 traits, though not consistently ( Nyhus and Webley, 2001 ; Kuhnen et al, 2013 ; Brown and Taylor, 2014 ; Harrison and Agnew, 2016 ), and to attitudes (about money, greed, materialism, risk, or debt itself) ( Webley and Nyhus, 2001 ; Watson, 2003 ; Norvilitis et al, 2006 ; Garðarsdóttir and Dittmar, 2012 ; Liao and Liu, 2012 ; Seuntjens et al, 2016 ). In this paper, however, we take a different tack, drawing on work on how more general biases in perception may make debt—a major source of stress in American life ( American Psychological Association [APA], 2019 ; Tay et al, 2017 )—seem prospectively more palatable.…”