PSYCHOLOGICAL-FACTORS IN CONSUMER DEBT - MONEY MANAGEMENT, ECONOMIC SOCIALIZATION, AND CREDIT USE

A postal survey study of factors correlated with consumer debt investi gated several psychological variables which have been suggested as cau ses or effects of debt. The survey was conducted with the help of a pu blic utility company, and questionnaires were sent to three groups wit h different debt histories over the preceding two years: Non-Debtors ( no debt to the company), Mild Debtors (late payment to the company), a nd Serious Debtors (sued for debt recovery by the company). Economic a nd demographic factors predicted debt category well, supporting previo us results. Further variance between groups was accounted for by peopl e's money management skills and facilities, by measures of their time horizons, and by aspects of their consumer behaviour. Non-debtors had more money management facilities (e.g. bank accounts) than debtors, an d rated their abilities at money management more highly. Debtors had s horter time horizons than non-debtors. Debtors were more likely to buy cigarettes and Christmas presents for children than non-debtors. No g roup differences were found for attitudes to debt or locus of control. There were significant group differences for measures of economic soc ialization, social comparisons, use of credit, and other aspects of co nsumer behaviour, but these differences were not independently signifi cant on multivariate analysis. Conclusions must be qualified because o f low return rates, but the results suggest that a complex of psycholo gical and behavioural variables affect debt and are affected by it. It is argued that these variables are linked to the psychology of povert y.