-
Journal of Economic Psychology 14 (1993) 85-119
North-Holland
8.5
The economic psychology of consumer debt
Stephen E.G. Lea, Paul Webley and R. Mark Levine * University of
Exeter, Exeter, UK
Received February 6, 1992; accepted August 31, 1992
Questionnaires were distributed to groups of people with either
no debt, mild debt, or serious debt to a public utility company.
Serious debtors were found to differ from the Non-debtor group on
economic, sociological, and psychological variables: economic
resources, economic need, social support, attitude forming
variables and attitudes all made independent contributions to the
prediction of group membership and the extent of self-reported
debt. Mild debtors were generally intermediate between Non-debtors
and Serious debtors. Debt was strongly correlated with economic
factors. Many results indicated that debt is a consequence of
adverse family economic conditions: Serious debtors were of lower
socioeconomic class, had lower incomes, were less likely to own
their own homes (and much less likely to own them outright), had
more children and were more likely to be single parents. They were
also younger. Social and psychological factors were also found to
be related to debt: Serious debtors were less likely to claim
Nonconformist, Agnostic or Atheist religious views, and they had
slightly more permissive attitudes towards debt, although no group
showed a general tendency to approval of debt. They knew more other
people who were in debt, and they were less likely to think that
their friends or relations would disapprove if they knew they were
in debt. Multivariate analyses showed that economic, social and
psychological variables all had independent correlation with debt.
These results suggest that debt is stronly influenced by adverse
economic circumstances, but that social and psychological factors
are also important. The conditions for the development of a
self-sustaining culture of debt do exist.
Introduction
Compared with many other kinds of economic behaviour, debt has
been relatively little explored from a psychological standpoint.
The
Correspondence too: S.E.G. Lea, University of Exeter, Dept. of
Psychology, Washington Singer Laboratories, Exeter EX4 4QG, UK. *
We would like to thank Welsh Water plc for their financial support
for this research, and particularly Noel Hufton, Jeffrey Phillips
and Wayne Rees for their interest and practical help. We are also
most grateful to Nicola Crichton and John Hinde for statistical
advice, to Cathy Walker and Emma Davies for background research and
much discussion, and to an anonymous reviewer for much helpful
advice. An earlier version of this paper was presented to the joint
meeting of the International Association for Research in Economic
Psychology and the Society for the Advancement of Socio-Economics,
Stockholm, June 1991.
0167-4870/93/$06.00 0 1993 - Elsevier Science Publishers B.V.
All rights reserved
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86 S.E.G. Lea et al. / Economic psychology of consumer debt
extent of consumer indebtedness has caused some public and
political concern (e.g. Leigh-Pemberton 1989), accompanied by
speculation about its origins in individuals circumstances or
attitudes. But only recently has there been any systematic study of
the social and psycho- logical background to debt (e.g. Berthoud
and Kempson 1990, 1992; Ford 1988; Livingstone and Lunt 1992;
Sullivan et al. 1989).
Some of this literature is more concerned with credit than with
debt. Though the distinction is fuzzy, by credit we usually imply
an arrangement to borrow money over some more or less defined
period, with an assumption that repayment is within the borrowers
means at all times. House mortgages and hire-purchase or instalment
credit schemes fall in this category, at least at the point when
they are arranged. In contrast, debt implies an obligation that the
borrower is either unable to discharge or is trying to avoid
discharging, at least at the time when it should be discharged.
Thus credit implies a willing lender (often, indeed, the loan is
made on the lenders initiative) while debt implies an unwilling
lender. The early work at the Michigan Survey Research Center
(summarized by Katona 1975: chapter 171 was mainly concerned with
credit, in this sense, rather than debt. Ranyards (1988)
theoretical analysis in terms of mental accounts is in the same
area, and Livingstone and Lunt (1992), Berthoud and Kempson (1990)
and Ford (1988) provide some of the empirical data base on which a
modern theoretical analysis can build.
Most of the rest of the literature deals with the opposite end
of the continuum, that is, with crisis debt. People who owe money
that they ought to repay, and cannot repay it at the moment when
they ought, may still be a long way short of being in a debt
crisis. They may be justifiably confident that the debt can and
will be discharged next payday; or they may just be putting off a
payment that they could afford to make, in order to retain
liquidity or even to maximize interest earned. Crisis debt arises
when there is no prospect of paying off or even reducing
accumulated debts, which are often increasing steadily. Its logical
result is bankruptcy, which was indeed devised to limit the damage
that individuals in debt crisis could suffer (Sullivan et al.
1989). Sullivan et al. and Corkish (in preparation) are dealing
specifically with the causes of unmanageable debt, and Lehnert
(1977) with its psychological consequences. The larger surveys
(e.g. Berthoud and Kempson 1990; Ford 1988) of normal credit use
also include some data on problem debt. Cameron and Golby (in
press), in a study of
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S.E.G. Lea et al. / Economic psychology of consumer debt 87
users of a debt counselling service, were able to look both at
the causes and consequences of unmanageable debt.
From these studies, a picture is beginning to emerge. Almost
everybody in modern western societies uses credit to some extent.
In Britain, almost three-quarters of households had at least one
credit agreement during 1989 (Berthoud and Kempson 1990). There are
sharp national differences in credit use (Katona 1975: 282-283),
and they would bear further investigation, but in any modern
economy, it is almost impossible to avoid having either a house
mortgage, a credit tariff for utilities, or a credit card. But
people vary considerably in how acceptable they find even these
agreed credit arrangements. They vary even more in how far and how
often they make the transition from credit to debt or from debt to
unmanageable debt.
The variables that are correlated with these transitions are not
altogether clear. Some studies show clearly that debt in general,
and unmanageable debt in particular, are problems of poverty.
Sullivan et al. (1989) argue, from their study of court records,
that people who go bankrupt are in the main ordinary Americans;
they just happen to have lower incomes or larger expenses (with the
same type of job and family situation) than the average, and fail
to cope. Other studies show that borrowing increases with income
and/or wealth (e.g. Ka- tona 1975; Livingstone and Lunt 1992), and
that those with the biggest unmanageable debts have or had the
highest incomes (e.g. Cameron and Golby in press). Many authors
have argued that there is an increasing public acceptance of both
credit and debt, leading to a culture of indebtedness which has
dangerous social and economic implications (e.g. Leigh-Pemberton
1989). Those who have carried out empirical research, however, have
generally argued that their results do not support this position
(e.g. Sullivan et al. 1989). On the other hand, attitudes and other
psychological variables do correlate with individual differences in
credit use (Katona 1975; Livingstone and Lunt 19921, and Lehnert
(1977) provides interesting psychological interpretations of a
number of case histories of bankruptcy.
One of the difficulties in interpreting the literature is that
most studies deal with either agreed credit or with unmanageable
debt; the intermediate category of non-agreed but manageable debt
has been very little investigated. There is a practical reason why
this is so. Because most people borrow in some form, credit use can
be studied through population surveys; at the other extreme,
samples of crisis
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88 S.E.G. Lea et al. / Economic psychology of consumer debt
debtors can be found through court records (e.g. Sullivan et al.
1989) or advice services (e.g. Cameron and Golby in press). Debt is
both less frequent and less visible. It is also quite likely not to
be acknowledged. Like many other behaviours which are either
illegal or not fully socially acceptable, it is difficult to
research by conventional surveys (Robins 1963). 0 ne of the few
studies to have looked at this kind of ordinary debt is a study by
Lunt and Livingstone (1991), and, significantly, this looks at the
explanations people give of other peoples debts, not at individuals
own experience of debt.
The present study looks at both crisis debt and at the more
elusive category of non-crisis (but non-agreed) debt. It took
advantage of an offer of co-operation from a major regional utility
company, Welsh Water plc. The company is the monopoly supplier of
water and sewerage services to approximately 1 million households
in Wales (and in part of one neighbouring English county). They
were thus able to supply us with random samples of up-to-date names
and addresses of householders. Far more important, they were able
to classify customers according to their credit status with the
company, from those with no water debt to those with major debt
problems. This meant that (with appropriate measures to ensure
confidentiality), we could mail to relatively large numbers of
people who were known to be in debt to different degrees; and we
could test the truthfulness of peoples answers in a sensitive
financial area.
The general aim of the study was thus to expand our knowledge of
the natural history of debt. From the previous literature, it was
clear that we could expect a large number of variables, some
economic, some sociological, and some psychological, to be
correlated with debt. An important question, however, is how far
they make independent contributions. The data of Livingstone and
Lunt (1992) suggest that the contributions of attitudes and
economic variables are largely independent, but they dealt largely
with credit rather than debt, and their measures of credit/debt
depended on self-report. We wanted to see whether their results
would be reproduced with a sample of including more people in more
serious financial difficulties, and using objective measures of
indebtedness. We classified the variables we considered as
follows:
- Economic resources: Income, employment status, home ownership;
- Economic need: Household size and constitution;
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S.E.G. Lea et al. / Economic psychology of consumer debt 89
- Social factors: Behaviour and attitudes of people known to the
respondents;
- Attitude-forming variables: Age and religion; - Attitudes
(measured by a conventional psychological scale).
These classes of variables form a rough hierarchy from the eco-
nomic to the psychological. From an economists point of view, even
the most economic of them are fairly soft, since they were obtained
by self-report, while from the psychological point of view even the
most psychological of them are fairly superficial. However, since
debt is an economic behaviour, the simplest and in a sense the most
conservative hypothesis is that it will have economic causes, and
any correlation with other variables will arise only as a result of
mutual dependence. We therefore wished to test whether each
successive class of variables had any independent effect after the
previous class had been taken into account.
Method
Sample
The aim in sampling was to send questionnaires to 100 households
in each of three credit status categories, in each of nine county
areas (the eight administrative counties of Wales plus part of the
county of Hereford and Worcester in England, which lies within the
Welsh Water area). The three credit status groups were:
- Non-debtors: those with no outstanding debt to the company; -
Mild debtors: those to whom a final demand (a second request
for
payment following the normal bill) had been sent, and no payment
yet received, but no further action had yet been thought
necessary;
- Serious debtors: those against whom court proceedings for
recovery of debt had been initiated.
The sampling procedure was as follows. Samples of about 150 were
drawn at random by Welsh Water staff from the names and addresses
of their customers within each county/credit category combination.
Envelope labels for these customers were printed by Welsh Water and
supplied to us. The county areas were obvious from the addresses;
to protect confidentiality, the credit categories were identified
only by
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90 S.E.G. Lea et al. / Economic psychology of consumer debt
codes. We selected 100 labels for each code/county combination,
largely at random but rejecting (i) addresses outside the county
area, presumably those of absentee landlords, and (ii) any where
the ad- dress was printed in an eccentric form which might have
identified Welsh Water as the source of the labels, since we were
anxious to avoid biasing the answers to questions about debts to
public utilities. Different coloured questionnaires were sent to
addresses bearing each code. For one code/county combination, only
40 labels were pro- vided. In all, therefore, 2640 questionnaires
were mailed out. This represents about 0.25% of the households in
the Welsh Water area.
After all questionnaires had been mailed out, surplus labels
were shredded, and Welsh Water then informed us which credit
categories corresponded to each code. As an added measure to ensure
confiden- tiality, none of those handling the questionnaires had
any substantial current connection with Wales, and in fact none of
us recognised any of the names or addresses used.
Questionnaire
The questionnaire consisted of a 4-page A4 leaflet. It
contained: (a) A question about the respondents current financial
position, to
be answered on a 5-point rating scale, followed by questions
about current debts to ten likely creditors, to be answered on a
4-point rating scale from None to Over &500; to allow a check
on the sampling procedure, debt to The water company was included
in this list. The ten creditors are shown in Figure lb. Note that
money- lender, one of the creditors used, in everyday British
English implies a specialist (and often not very respectable)
trader, not a bank or other general financial business.
(b) Questions about how urgent it would be to repay a debt to
the same ten creditors, and what the respondent had in fact done
when last asked for repayment by them; plus three questions which
between them gave the respondents order of priority for repayment
to the four public utilities (gas, electricity, water and
telephone).
(cl Questions about whether other people had told the respondent
they were in debt, about the reaction they would expect from others
who knew the respondent was in debt, and about people or organiza-
tions they had spoken to about any current debt.
(d) Twelve questions exploring attitudes to debt, spending and
saving in general, intended to serve as a pilot towards the
develop-
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S.E.G. Lea et al. / Economic psychology of consumer debt 91
ment of a full debt attitudes questionnaire. These questions are
listed in Table 1. They were to be answered on a l- to I-/-point
scale from Very strongly agree to Very strongly disagree.
(e) A page of questions about the social, demographic,
occupational and economic status of the respondent and his or her
household.
All questions were asked in as colloquial a style as
possible.
Procedure
The questionnaires were distributed along with a letter which
invited the recipient to participate, explained the purposes of the
research, and gave assurances about confidentiality. Recipients
were invited to write to the researchers if they wanted information
about the results of the research. To avoid biasing the answers,
the letter made no mention either of the support being given by
Welsh Water, or of the selection of recipients by credit
categories. A Freepost (reply-paid) envelope was enclosed for the
return of the question- naire. The county area to which the
questionnaire had been sent was written on the outside of this
envelope. Although a minority of the Welsh population have Welsh as
their first language, all materials were distributed in English
only.
The selection of recipients was made in February 1991, and ques-
tionnaires were mailed in early March 1991. When the questionnaires
were returned, they were datestamped and numbered, and the county
area from which they came was written on them. The replies to
questions about occupation were coded, using the Hall-Jones scale
of occupational prestige (see Oppenheim 19661, to give social class
categories. Data analysis was carried out using the SPSS, Minitab
and LIMDEP packages. Although most of the variables were essen-
tially ordinal, all data were first examined, and their statistical
signifi- cance was tested, using categorical procedures, in case
there were any non-monotonic relationships.
Results
Return rates
The number of usable questionnaires returned was 420, of which
203, 127 and 90 came from the Non-debtor, Mild debtor and
Serious
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92 5. E.G. Lea et al. / Economic psychology of consumer debt
debtor categories respectively. After allowing for
questionnaires re- turned as undeliverable by the post office, the
return rate was 16% overall, and 23%, 14% and 11% in each credit
category. There were no substantial differences in return rate
between county areas. Adjust- ing for the fact that the two debt
groups are minorities within the population, these return rates
would correspond to an approximately 21% return from a random
sample of households. The proportion of male respondents was 56%.
Four respondents wrote separately, re- questing information about
the results of the research. One tele- phoned to complain about
being contacted; one returned a defaced questionnaire, and ten
returned completely blank forms, presumably also a form of
protest.
Many questionnaires lacked answers to some questions. In the
analyses that follow, all available data for each question have
been used, even if the questionnaire was incomplete in other
respects.
There was no obvious multimodality in the distribution of return
lags. Accordingly, those questionnaires that were returned after
more than 11 days were classified as late, and used as a model for
non-returns (cf. Oppenheim 1966). They constituted 38% of the total
usable returns, including 37% of the Non-debtor group, 43% of the
Mild debtors, and 33% of the Serious debtors.
Manipulation checks
Figure la shows how respondents described their financial
position. Non-debtors showed a symmetrical distribution across the
response categories while Mild and Serious debtors showed
increasing skew towards the Very difficult.
Figure lb shows the responses to the questions about current
debts. The leftmost bars show reports of debts to The water
company, which was used as a check on the sampling procedure and
the respondents truthfulness. In the Non-debtor category, only 10%
reported that they owed money to the water company; this figure
rose to 32% for the Mild debt group and 72% for the Serious
debtors, The answers to the questions about debts to other
creditors showed striking correlations. In the Non-debtor group,
66% claimed to owe nothing to any of the nine listed creditors,
other than the water company (note that the questionnaire indicated
explicitly that we were only calling a mortgage a debt if payments
were overdue). The
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S.E.G. Lea et al. / Economic psychology of consumer debt
Subjective financial position 50%
40%
30%
20%
10%
0% Very difficult Just coping Could be better About right Very
healthy
Subjective financial position
m No debt @8 Mild debt a Serious debt
Self-reported debt
and credit group
m No debt @88 Mild debt a Serious debt
% with debts to
93
Fig. 1. Validation of the credit groups manipulation: credit
group related to subjective (a) financial situation and (b)
self-reported debt.
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94 S.E.G. Lea et al. / Economic psychology of consumer debt
corresponding figures for Mild and Serious debtors were 36% and
16%. The creditors to whom most respondents were in debt were
credit card companies (37% acknowledging some debt, 11% for over
X500); fewest acknowledged debt to a close friend (5%, 1% for over
fSOO>.
Repayment
Figures 2 and 3 show responses to questions about how urgent it
would be to repay a debt to ten possible creditors. Here there are
rather few differences between credit groups. We also asked what
people had done on the last few occasions when they were asked to
repay money by the same ten creditors. For the water company, the
modal responses of the Non-debtor group was I paid up immediately
(43%), while for the debtors it was I waited for the final demand
(Mild debtors, 54%; Serious debtors 66%). Scoring I paid up immedi-
ately as 4 and I didnt repay it as 1, the mean immediacy ratings
for repaying the other nine creditors were 3.0, 2.7 and 2.4.
Figure 4 shows the rankings of the urgency of repaying the four
public utilities in the three credit rating groups. These rankings
showed fair consistency (Kendalls W coefficient of concordance =
0.32 for the sample as a whole, and 0.32, 0.36 and 0.27 for
Non-debtor, Mild debt and Serious debt groups). For all three
credit status groups, most urgency was attached to repaying an
overdue electricity bill, and least to a telephone bill; gas and
water bills were intermediate, with slightly more urgency attached
to the gas bill.
First order differences between credit rating groups
Unless there is a specific comment to the contrary, all group
differences described here reached at least the 0.05 significance
level, using chi-squared tests. The differences meeting this
criterion are listed in Table 2, which also reports the actual
significance levels reached.
Economic resources
We have already reported the differences between credit groups
in the subjective financial strain they reported. Figure 5 shows
that more
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S.E.G. Lea et al. / Economic psychology of consumer debt
Urgency of repaying different creditors (1)
Welsh Water
Mortgage or rent 707.,
Electricity board
Urgency Ol repayment
I No debt !Tm Mdd debt 0 srnova dab,
British Telecom
TV rental
95
Fig. 2. Distributions of reported urgencies of repaying
creditors in the three credit rating groups (1): Utilities,
housing, and TV rental.
specific measures of economic resources showed similar trends.
Fam- ily income was asked for directly on the questionnaire (in the
broad categories used in the figure); both debt groups reported
lower in- come than the Non-debtors. Occupational status was
deduced from
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96 S.E.G. Lea et al. / Economic psychology of consumer debt
LJrgency of repaying different creditors (2)
Welsh Water
Fami1.y
Credit card
Close friend
Money lender
Fig. 3. Urgencies of reported urgencies of repaying creditors in
the three credit rating groups (2): Family, friends, credit cards
and moneylenders.
questions about the occupation (or past occupation) of members
of the household. Wherever possible, respondents were classified
even if not currently economically active, and those who could not
be classi- fied were dropped from the present analysis. Although
distributions of
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S.E.G. Lea et al. / Economic psychology of consumer debt
Priorities for repayment Electricity board British Gas
97
Fig. 4. Distributions of priorities for repayment of a
hypothetical debt to four utilities in the three credit-rating
groups.
socioeconomic class for all three credit categories were
bimodal, both debtor groups clearly tended to lower occupational
classes than the Non-debtors.
Housing conditions also showed marked variation (Figure 6a). The
three main categories represented were outright ownership, owner-
ship through a mortgage, and renting from the council (private
renting is probably underrepresented in the sample since in many
cases landlords would be responsible for water charges). Among the
Non- debtors, the modal category was outright ownership (50%),
among Mild debtors it was ownership via mortgage (53%), while among
Serious debtors it was council tenancy.
Economic need
The questionnaire items that were intended to reflect economic
need asked about the marital status of the respondent, and the
number of adults and the number of children present in the house-
hold. There were no significant relations between credit category
and
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98 S.E.G. Lea et al. / Economic psychology of consumer debt
Annual family income and credit group
30%
20%
10%
0%
30%
25%
20%
15%
10%
5%
0%
L
under L5000 L5000-L10000 L10000-Ll5000 L15000-L20000 over
L20000
Annual family income
m No debt &8 Mild debt m Serious debt
Socio-economic class and credit group
m No debt k88$ Mild debt a Serious debt
Fig. 5. Economic resources: distributions of reported income and
occupational class in the credit groups.
-
60%
50%
40%
30%
20%
10%
0% Owned outright Mortgage
S. E. G. Lea et al. / Economic psychology of consumer debt
Housing type and credit group
99
Private rent Council rent Family/friends
Housing type
m No debt m Mild debt a Serious debt
Children in household and credit group
60%
40%
20%
0% m None 2 3 or more
Number of children in household
m No debt m Mild debt / Serious debt
Fig. 6. Economic resources and economic needs: distributions of
(a) housing status and (b) numbers of children in household in each
credit group.
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100 S.E.G. Lea et al. / Economic psychology of consumer debt
either marital status or the number of adults, though the two
debtor groups were somewhat less likely to be either married or
living with a partner, and more likely to be in households with one
or three or more adults rather than two. However, there were marked
differences in relation to the numbers of children in the household
(Figure 6b). The mode for all groups was none, but childless
households accounted for 75% of the Non-debtor group, 54% of the
Mild debtors, and only 32% of the Serious debtor group, while those
with 3 or more children accounted for l%, 11% and 19% of the three
groups respectively. Although the number of adults in the household
did not have a significant effect as such, a variable constructed
from it did. We coded the 35 respondents who reported one adult and
at least one child in the household as single parents. They formed
5% of the Non-debtors, 6% of the Mild debtors, and 19% of the
Serious debt group.
Social support for debt
Questions addressing this factor asked about the attitudes of
other people known to the respondent towards debt, either their own
or the respondents. We asked, Have any of your family, friends or
relations told you they are in debt ? Responses are summarized in
Figure 7a. Most of the Non-debtor group (53%) responded None; for
the Mild debtors the modal response was a few, and for the Serious
debtors, it was nearly all. We also asked how respondents thought
their friends and relations would react if the respondent told them
that he or she owed El00 or more to a public utility company.
Responses to this question are summarized in Figure 7b. The modal
response from Non-debtors was They would think it odd and not
understand, while from Mild and Serious debtors it was They would
understand but think it unwise. The proportions giving the response
They would think it normal were much higher for the Serious debt
group than for the other two. As regards consulting other people or
agencies about debt, the one most often consulted was a member of
your family (18% of all respondents, including 28% of the Serious
debt group). The local council were consulted by fewest people (6%
of all respon- dents and 13% of the Serious debt group.
Attitude-forming variables
We considered the following variables that might have been ex-
pected to contribute to the respondents attitude towards debt:
gen-
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S.E.G. Lea et al. / Economic psychology of consumer debt 101
60%
50%
40%
30%
20%
10%
0%
Other people and debt
Are other people you know in debt?
Several Nearly all
People you know who are in debt
Others attitudes if you had debts of LlOO for electricity, water
or gas
60%
50%
40%
30%
20%
10%
n4. rhaapprore Not understand nderatand but... nmlc it
norms,
Attitude of friends/family
m No debt m Mild debt 0 Serious debt
Fig. 7. Social support for debt in the three credit groups:
distributions of (a) numbers of other people, known to the
respondents to be in debt and (b) expected attitudes of others if
they knew
the respondent was in debt.
der, age, and religious affiliation. In addition, of course, the
variables we have considered as antecedents of debt may in fact
have their effect by way of changes in attitudes. Gender had no
significant effect,
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102 S.E.G. Lea et al. / Economic psychology of consumer debt
but there were significant effects of age and reported religious
affilia- tion (Figure 8). Although the Age effect is not completely
straightfor- ward, both debt groups were substantially younger than
the Non-de- btors. In all credit categories, the modal religious
affiliation claimed was Anglican, but in the Non-debtor group,
there were elevated proportions of Non-conformists and
Agnostics/Atheists. Numbers of Roman Catholic and Other responses
were correspondingly higher in the debtor groups. Only one
respondent claimed to be Moslem and none to be Hindu, suggesting
that there was a low rate of return from ethnic minority
communities.
Attitudes to debt
Using the total sample, Cronbachs (Y for the 12-item scale was
found to be 0.70, indicating an acceptable degree of scale
homogene- ity. Table 1 shows that all but two items (Big companies
can look after themselves and A credit card is a ticket to careless
spending) had at least moderate correlations with the total of the
remainder. Although the (Y value could have been improved
marginally by drop- ping these two items, in the interests of
retaining a broad approach to debt attitudes (and because a full
psychometric investigation is planned for later in the research
programme), all items were retained. Since the overall sample is
not population-representative, being over- weighted with debtors,
the reliability analysis was rerun on the Non- debtor group alone;
the results were essentially unchanged. Principal components
analysis of the responses to the 12 items produced only three
components with eigenvalues greater than 1 (3.13, 1.91 and 1.06).
The first component could be identified as an approval of debt
measure, with all items loading appropriately on it; no
interpretation of the other two major components was possible. It
was therefore judged appropriate to use the 12 items as a scale of
attitudes towards debt. Figure 9 shows the mean scale scores for
the three respondent groups, scoring Very strongly agree as 1 and
Very strongly disagree as 7. Clearly all groups tend to disagree
with pro-debt statements, but disagreement is weaker in the debt
groups.
Multivariate analysis
Dependent variables We attempted to predict four measures of
indebtedness: the credit
rating group; whether or not the respondent reported any debt;
and
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S. E. G. Lea et al. / Economic psychology of consumer debt
Age and credit group 35%,
20%
15%
10%
5%
0% under 25 25-34
60%
50%
40%
30%
20%
10%
0%
Religious affiliation and credit group
Roman Catholic Anglican
I 55-64 65-74 75 and over
Age group
m No debt m Mild debt m Serious debt
Non-conformistAgnostic/Atheist Other
103
Religious affiliation
m No debt m Mild debt u Serious debt
Fig. 8. Attitude-forming variables: distributions of age and
religious affiliation in the three credit groups.
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104 S.E.G. Lea et al. / Economic psychology of consumer debt
Table 1 Items used in the debt attitudes scale, together with
scoring key and item-total correlations.
Item Scoring Item-total correlation
a if item deleted
Most people buy too much on credit I am careless with money It
is better to save before rather than
+ 0.29 0.69 _ 0.40 0.67
after buying expensive things + 0.51 0.66 I do not like being in
debt + 0.26 0.69 If youve got money you might as well spend it _
0.43 0.67 I find it hard to keep track of my money - 0.30 0.69
Debts should be repaid as soon as possible + 0.48 0.67 Big
companies can look after themselves _ 0.07 0.72 A credit card is a
ticket to careless spending + 0.17 0.71 I put money aside on a
regular basis for the future + 0.45 0.66 It is OK to be in debt as
long as you pay off
the debt in the end It is important to live within ones
means
_ 0.35 0.68 + 0.45 0.67
for those who did report some debt, two measures of its
severity, scored as follows. The first measure emphasised the
breadth of indebtedness, by scoring each creditor from 1 (no
reported debt) to 4 (debts of over &SO0 reported), and
totalling these scores across the 10 creditors. The second measure
emphasised the depth of indebtedness, by replacing these ordinal
scores by midpoints of the answer cate- gories (0, f50, &300
and flOO0 respectively) before summing. The two measures are
referred to below as the breadth and depth measures of
self-reported debt. Because many respondents failed to answer one
or two questions, the effective sample sizes for the analysis of
credit- rating group is reduced to 332; it was substantially lower
for the self-reported debt analysis, with only 253 usable
responses. Of these, 143 reported some debt, so this was the sample
size for the third analysis. Prediction of credit-rating group was
carried out by ordered logit analysis, prediction of the presence
or absence of self-reported debt by logit analysis, and prediction
of level of self-reported debt by multiple regression.
The ten potential creditors listed on the questionnaire were a
somewhat heterogeneous group, so the responses to these items of
those respondents acknowledging some debt were subjected to relia-
bility and principal components analysis, before and after
converting
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SE. G. Lea et al. / Economic psychology of consumer debt 105
Attitudes toward debt 1 =strongly disagree, 7=strongly agree
Agreement with pro-debt statements
I , No debt
I
Mild debt
I /
Serious debt
Credit group
Fig. 9. Attitudes towards debt: mean scores for agreement with a
pro-debt attitude on the 12-item scale.
ordinal scores to range midpoints. Reliabilities were
unimpressive (Cronbach cy values of 0.45 for both measures).
However, in both cases there was a strong first principal component
which loaded positively on all items but one item (eigenvalues 2.84
and 2.31 for the two measures; the anomalous items were debts on
credit cards for the breadth measure and on TV rental for the depth
measure>. No subsequent component suggested an interpretable
grouping of credi- tors for either measure.
Independent variables Only the predictor variables listed in
Table 2, which had been
shown to have a significant first-order effect, were included in
the
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106 S. E. G. Lea et al. / Economic psychology of consumer
debt
Table 2 Summary of differences between the three creditor
categories. Only differences significant at at least the 0.05 level
are shown.
Variable
Income Socioeconomic
status Household financial
position
Housing
Children in household
Single parents Number of
friends/family who are in debt
Attitude of friends/family to respondents debt
Age Religious
affiliation
Attitudes towards debt
Debts to other creditors
Tendency of debtor groups
Lower Lower status
More difficult
More council tenants, fewer own houses outright
More
More More
Less disapproving
Younger Fewer non-
conformists, atheists and agnostics
Less unfavourable
More, have at least one
x2
18.02 33.53
100.14
95.56
66.20
16.75 68.74
49.24
65.80 23.14
62.40
F df (Y
8 0.05 14 0.01
8 0.00005
6 0.00005
6 0.00005
2 0.0005 6 0.00005
6 0.00005
14.93 2,377 0.0005
2 0.00005
12 0.00005 8 0.01
multivariate analyses. In some cases categories were combined
be- cause group sizes would otherwise have been too small. The
final list of variables used is given in Table 4. They include 7
ordinal or dichotomous variables, and three variables (housing
status, age, and religious affiliation), represented by 3, 4 and 2
dummy variables respectively, making a total of 16 regressors.
It is to be expected that data from a study of the present sort
will show intercorrelation of the independent variables. It is
therefore important to test whether there is sufficient
multicollinearity between
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S.E.G. Lea et al. / Economic psychology of consumer debt 107
the variables to invalidate the results. The 15 variables listed
in Table 4 were therefore submitted to principal components
analysis. The analysis yielded only 6 factors with eigenvalues
greater than 1.0, implying some degree of redundancy between the
variables. However, when each of the variables in turn was
regressed against all the others, the maximum value of R*-adjusted
obtained was 66%, implying that none of the variables is unduly
dependent on the remainder.
Hierarchical analyses
For each dependent variable, a hierarchical analysis was used,
which investigated a series of groups of variables in turn. The
vari- ables were entered into the analysis in the groups listed in
the introduction and used in the presentation of first-order
effects (Eco- nomic Resources, Economic Need, Social Support for
debt, Attitude- forming variables, and Attitudes), in that order.
This analysis assesses the influence and statistical significance
of each group given that all previous groups have already been
taken into account. Table 3 gives the results. For each analysis,
the significance of the improvement of prediction made by adding
each group of variables can be tested, approximately, by using a
chi-squared test based on the resulting increase in log likelihood
ratio for the logit models and the usual F test for the multiple
regression analyses. The table shows that adding each successive
group of predictor variables had a significant effect on both
measures of the presence of debt, but the attitude-forming
variables did not significantly improve the prediction of either
mea- sure of the extent of self-reported debt, and the economic
need variables made no significant improvement to the depth
measure. Note that despite these statistically significant trends,
the increases in predictive success on adding more variables are
small, especially for credit-rating group. In some cases adding
more variables even reduces the numerical success in prediction,
though the significant results of the log-likelihood ratio test
mean that the evidence in favour of misclassifications, or against
correct classifications, must have been reduced. If the aim is to
predict membership of these actual cate- gories, rather than using
them as indices of indebtedness, the most successful model would
include fewer variables; the most effective model uses as
predictors only income, renting (or living with friends
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108 S. E. G. Lea et al. / Economic psychology of consumer
debt
Table 3 Results of multivariate analyses: (a) Hierarchical
analysis. Each row shows the effect of adding a group of variables
to the predictor set while retaining all those given above. Entries
under success give the proportion of individuals correctly
categorized after adding the new group of variables for the first
two analyses, and the R*-adjusted value for the third. x2 and F
statistics test the significance of the improvement in
predictiveness produced by adding them.
Predictor group (with increment
Credit-rating Self-reported debt Extent of debt reported
and residual (df) Success x2 Success x2 Breadth Depth
measure
Success F CR*-adj.)
measure
Success F (R2-adj.)
Economic resources 58% 92.12 71% 45.56 8% 4.09 = 9% 4.64 b
(4,139) Economic need 60% 15.30 c 71% 6.13 a 9% 1.75 9% 0.53
(2,137) Social support for
debt 61% 10.29 74% 33.30 c 20% 10.48 c 15% 6.30 b
(2,135) Attitude forming
variables 60% 12.47 77% 17.81 b 23% 1.96 18% 1.83
(6,129) Attitudes 59% 6.56 a 79% 6.15 a 28% 8.54 b 21% 6.15
a
(1,128)
a p < 0.05; h p < 0.01; = p < 0.001.
etc.) as against owner-occupancy, number of children in
household and a simple age breakdown into those above and below age
55. This reduced model successfully categorizes 63% of the
respondents. The models reported in Table 3, however, would be
expected to be better predictors across a full range of levels of
indebtedness.
Simultaneous analysis
To locate these effects more precisely, we looked at the
situation after all the variables had been entered simultaneously,
so as to assess the influence and significance of each predictor in
the presence of all others. Table 4 shows the results. The entries
are regression coeffi- cients, that is to say, they show the effect
on the dependent variable of a unit change in the predictor.
Because both the predictors and the
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S.E. G. Lea et al. / Economic psychology of consumer debt
109
Table 4 Results of the multivariate analyses: (b) Overall
analysis. Entries in the main body of the table are regression
coefficients for each predictors independent contribution to the
dependent variable. Positive coefficients indicate an increasing
tendency to indebtedness for increasing values of the
predictor.
Predictor Dependent variable
Credit rating of
Existence self-
Extent of self- reported debt
grow reported l-l.+ Breadth F;L measure
- Economic resources Family income Occupational class Housing
(difference from mortgage) Owned outright Rented or living with
family or
friends
- 0.281 a 0.007
- 0.735 a
0.987 b
Economic need Children in household Single parent
0.430 c 0.153 0.284 63 - 0.241 1.507 0.496 7
Social support for debt Number of family or friends in debt
Attitudes of others to respondents
debt
0.270 =
0.093
Attitude forming variables Age (differences from 35-44): under
25 25-34 45-54 55 and over Religion (differences from
Anglican): Roman Catholic or other Non-conformist, agnostic or
atheist
1.137 16.030 0.272 1.564 b 0.818 a - 0.030
- 0.027 - 0.244
0.428 - 0.281
Attitudes 0.477 =
Cases included (N) Overall x2 (14 df) Overall Rz-adj. Overall F
(14, N-15 df)
332 253 137.17 = 108.94
a p < 0.05; b p < 0.01; c p < 0.001.
-0.152 - 0.040
- 0.532 a -65 - 0.456 -11
- 0.225 - 0.532 - 395
0.509 - 1.532 = -460 a
0.714 b 1.119 =
0.462 a 0.081
1.774 0.530
- 1.358 - 0.463
0.099 - 0.034
0.649 a
0.039 - 0.681
1.133 b
143
27.5% 4.62
Depth measure
250 b
-53
754 = 219
- 280 -43
- 146 -34
267 a
143
21.3% 3.39 =
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110 S.E.G. Lea et al. / Economic psychology of consumer debt
dependent variables are on differing scales, numerical
comparisons of these coefficients either across the rows or down
the columns of the table are not always meaningful. However, both
the signs of the coefficients and comparisons of ratios of
coefficients do have a direct interpretation. It can be seen that
not all the variables in the groups had significant effects on all
dependent variables, and some had no significant effect on any
variable. In the Economic Resource group, occupational class had no
significant effect on any variable (indicating that the effect seen
in Figure 5b can be explained by the correlation of class with such
variables as income and housing status). In the Social Support
group, the number of other people respondents knew who were in debt
had an independent effect on all dependent variables, but
respondents estimates of others attitudes to their (the respon-
dents) debt had no significant effects. In the Attitude-forming
vari- ables group, Age showed some independent effects but
religious affiliation did not. The only anomaly, relative to the
first order effects shown in the figures, occurs in the Economic
Resources group, where both measures of the extent of debt show a
negative effect of renting rather than owning a house on a
mortgage.
The relative effectiveness of the predictors (indicated by the
signifi- cant levels they reach) were slightly different for the
different depen- dent variables. For credit-rating group, the
variables that emerged as having the largest independent effect
were the number of children in the household and the housing
variables. For the existence of self-re- ported debt, the number of
family and friends in debt and age group (with young respondents
being most likely to report debt) were most important. For the
extent of self-reported debt, number of family and friends in debt
and (especially) attitudes were most significant. Table 4 also
shows some interesting reversals. House renters are significantly
more likely to be in one of the debt groups, and
(non-significantly) more likely to self-report debts, but if they
do report debts, the amount is significantly less than for mortgage
holders. Those in the 45-54 age group are significantly more likely
to be in the debt groups, but (non-significantly) less likely to
self-report debt, and if they do report any, report less than the
modal (35-44) age group.
As a check on the possible distortions introduced by
non-returns, the factor of late return was introduced into all four
multivariate analyses after obtaining the results reported in Table
4. It had no significant effect on any dependent variable, and the
general pattern
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S.E. G. Lea et al. / Economic psychology of consumer debt
111
Table 5 Use made of sources of help by respondents in the
Serious debt group.
Source of help Percentage of the group reporting using
source
Person/institution to which money is owed Friend Family Bank or
building society manager Unemployment/Social security office
Citizens Advice Bureau Local council Other
33% 32% 28% 26% 16% 14% 13% 3%
of regression coefficients was unchanged. The only substantial
change was that, with late return taken into account, the perceived
attitudes of others to the respondents debt showed a significant
independent effect on the presence of self-reported debt, whereas
income and housing variables did not.
Further analysis of the Serious debt group
Further analyses were carried out on the group of Serious
debtors. Table 5 lists the proportion of the group who reported
using each of the helping agencies we enquired about. It can be
seen that most of them are used a considerable extent, and no one
of them is dominant.
Most of the Serious debt group reported seeking help from at
least one of the agencies listed in Table 5; only 19% did not use
any of them. This small group differed from the rest of the Serious
debt group in a number of ways. Differences that were found to be
statistically significant are listed in Table 6. A minority (28%)
of respondents in the Serious debt group reported that they did not
have any debt to the water company. Their answers to the remaining
questions on the questionnaire were compared with those of the rest
of the Serious debt group, and a number of significant differences
were found. These are also listed in Table 6. The differences on
both these factors are almost all in the direction of the minority
group (non seekers of help, or those not reporting debt to the
water company) being more like Non-debtors or Mild debtors than the
rest of the
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112 S. E. G. Lea et al. / Economic psychology of consumer
debt
Serious debt group. The only exception is that those not
reporting debt claim that their family or friends would be less
disapproving of their (the respondents) debt if they knew of
it.
Discussion
Representativeness of the sample
The response rate was disappointing. However, the estimated
figure for a corresponding random population sample, 21%, is not
unreason- able given that the subject of the questionnaire was a
potentially sensitive one. The lower figures for the two debtor
groups were to be expected, given that the subject was not just
potentially but actually sensitive for them, and for the Serious
debtors at least, they were individuals who were facing fairly
serious difficulties. It is unlikely that filling in questionnaires
would be high in their priorities. The multi- variate analysis
indicates that, with other variables taken into account, there is
no significant or substantial difference between early and late
returned questionnaires, despite a marked tendency for the debt
groups, especially the Mild debt group, to be late returners. This
makes it less likely that non-return will have affected the pattern
of results (Oppenheim 1966).
As a sample of the population as a whole, water customers will
show some inevitable deviations. Private tenants, people in
lodgings or living with family or friends, the young and the old,
are likely to be seriously underrepresented. Furthermore, water
bills are addressed to one person in a household, and given
traditional gender roles this is most likely to be the husband or
father. In spite of these difficulties, the respondents seem to
constitute a very reasonably representative sample. The gender
distribution is surprisingly near equality; the overall age profile
is close to the population form except at the extremes; and the
income and social status profiles are also close to population
values. Except for the near absence of private tenants, the same
could be said of the housing profile.
The credit groups manipulation
Two lines of evidence show that the sampling procedure was
successful in identifying groups who were not in debt, mildly in
debt,
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S.E.G. Lea et al. / Economic psychology of consumer debt 113
and seriously in debt. First, when asked directly about debt to
the water company, almost none of the Non-debtor group, a third of
the Mild debt group, and a substantial majority of the Serious debt
groups, acknowledged some debt. Bearing in mind the lag between
selection of addresses and return of questionnaires, the anomalies
are not a major cause for concern, though they may indicate some
tendency to self presentation. Second, on every measure that could
reflect financial strain, the three groups differed in the expected
way. There was, indeed, nothing at all special about water charge
debt. Respondents whom we knew to owe money to the water company
also
Table 6 Significant differences within the Serious debt group
according as to whether or not they sought any form of help, and
whether or not they reported that they had any debt to the water
company. Note that if there is no entry in the X2 column for one of
the two partitions group, then there was no significant difference
for that grouping for the variable concerned.
Variable Responses of non-help X2 (df) users and/or non-
acknowledgers of debt:
For help use For self- report of water debt
Subjective financial Less difficult 11.98 b (3) 14.43 b
position
Overdue payments on mortgage or rent
Debt to water company Debt to electricity
board Debt to British Gas Debt to British
Telecom Action on last credit
card debt Number of family
friends in debt Reactions of
friends/family to respondents debt
Help sought from local council
Marital status
Housing status
Income
a p < 0.05; b p < 0.01.
Less
Less Less
Less Less
Repaid sooner
Fewer
Less disapproving
Less
Fewer singles, divorced or separated
More owners, fewer tenants
Higher
9.19 a (3) 8.97 a (3)
9.46 a (3) 10.68 a (3)
10.17 a (3) 6.17 a (2)
11.68 = (3)
10.44 a (3)
8.19 = (3)
3.92 a (1)
10.63 a (4)
10.52 a (4)
9.91 a (4) 12.41 a (4)
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114 S.E.G. Lea et al. / Economic psychology of consumer debt
acknowledged debts to other creditors, and those whose water
debt was more serious acknowledged more additional debts. Public
utility companies differ from some of the other creditors we asked
about, in that they do not set out to lend people money, and people
do not ask their permission before borrowing from them (i.e. paying
their bills late or not at all). Furthermore they have a
well-structured system of reminders, court proceedings, and
ultimately disconnection, the first stages of which, at least, are
well known to their customers. However, none of these differences
seemed to produce behaviour that was very different from that shown
towards other creditors.
Debt and financial strain
The overwhelming impression from the results is that debt is
primarily a problem of poverty, and in particular of family
poverty. Compared with the Non-debtors, the Serious debt group have
lower household income, are of lower socioeconomic class, are less
likely to own their homes (and much less likely to own them free of
a mortgage), and have more children. Both these results agree with
data obtained by Berthoud and Kempson (1990) concerning problem
debts. It is particularly striking that only 1% of the Non-debtor
group had three or more children in their households. With the
exception of the effects of class, all these results are confirmed
as independent of one another by the multivariate analyses. There
were also trends, though they fall short of significance, for
debtors to be less likely to be living in two-adult households
built round stable relationships. On first-order analysis, the
debtor groups emerge as younger (again a finding agree- ing with
Berthoud and Kempsons, 1990, analysis), so presumably their
children are younger; it should be noted, however, that the
multivari- ate analysis of credit-rating group suggests a
subsidiary peak of indebtedness in the 45-54 age group. In all
these respects, the Mild debtors are intermediate between the
Non-debtors and the Serious debtors, which adds credibility to the
results. The results here are consistent with the classic
cross-sectional econometric results on the saving ratio (e.g. Bean
19461, which show that as income increases, so does the proportion
of it that is saved; since running up debt is simply a form of
negative saving, it is in no way surprising that it is more often
done by those with low incomes.
There is considerable evidence, then, that debt is an unsought
consequence of a households financial difficulties. Those
difficulties
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S.E. G. Lea et al. / Economic psychology of consumer debt
115
might arise simply from an impossible economic environment, from
individual financial incompetence, or (most likely) from a
combination - less competence is needed to keep ones head above
water on an income of over &20,000 a year than on one of under
&5000. Perhaps persistent debtors have poorly organized
psychological accounts (Ranyard 1988). This possibility does not
exclude strategic use of Hump debt. A mortgage is, in fact, the
classic hump debt device, allowing one to consume housing services
which ones current income is not sufficient to buy; postponing
payments to credit card companies, friends and family, and public
utilities is simply a less legitimized extension, but one which is
available to people who cannot get a footing on the mortgage
system. It is interesting in this context that there is a
consistent consumer view about which household bills should be paid
off first, given limited funds (Figure 4).
The general trends, therefore, give no evidence that consumers
are fecklessly or carelessly running up debt. Compared with the
results obtained by Lunt and Livingstone (1991) on the explanations
people give of others debts, the data suggest that the causes of
debts are more external and economic than most people think: greed
and lack of self-control are not much in evidence in our data,
whereas they are central to the explanatory networks people produce
when they are asked why they think people run into debt. It is true
that for each of the trends outlined above, there were a minority
even of the serious debtors who did not accord with the general
rule - who were of higher social class, owned their own homes, had
high incomes, had no children, and so forth. However, the breakdown
of the Serious debt groups suggests that these were the people who
had in fact recently repaid their water debt. Possibly they
included some feckless or even strategic debtors, but if so it
looks as though appropriate legal steps were sufficient to make
them repay their debts.
Secondly, however, we must bear in mind the low return rate,
especially in the debtor groups. If there is a group of feckless
debtors, they are probably the least likely people to fill in and
return a questionnaire that drops on them out of the blue. Methods
other than random postal surveys are going to be needed to reach
this group if it exists.
Several authors (e.g. Berthoud and Kempson 1990; Cameron and
Golby in press) have found that the amount of indebtedness
increased with income, whereas we found that debtors were more
likely to be
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116 S.E.G. Lea et al. / Economic psychology of consumer debt
young and to have low incomes. However, Cameron and Golby were
looking at crisis debtors, and Berthoud and Kempson at people who
were using credit rather than running up debts. Those with high
income can safely use larger credit facilities, and if things go
wrong are likely to be left with larger unmanageable debts. But our
data show that, as one would expect, everyday debt is nonetheless
associ- ated with low income.
Debt attitudes and a debtor culture?
But if economic factors play an important part in debt, social
and psychological factors are also relevant. Age effects were at
least partly independent of both economic and attitude variables,
and in so far as that is true, they are presumably also mediated by
psychological processes. The religious backgrounds of the groups
were somewhat different, and it is hard to avoid seeing the
remnants of the Victorian Non-conformist conscience in the higher
numbers of this group among the Non-debtors. The same could be said
of the agnostic/atheist group, also likely to represent a
thought-out rather than a casually acquired position. It should be
noted, however, that none of the religious affiliation effects
emerged as independently significant in the multivariate analysis
(though the same trends were evident), so these differences may
just reflect the different characteristic affiliations of those who
are, for other reasons, more and less likely to be in debt.
There was clearly quite a lot of social support for debt among
the debtor groups. They were much more likely to know others who
were in debt, and less likely to think that others would disapprove
of their debts; 33% of Serious debtors thought that their friends
would think it normal to owe at least flO0 to a public utility
company. While this is a striking result, it is not a surprising
one. The general trend of the results shows that debt is primarily
a consequence of poverty. The social worlds of those who have
little money are likely to contain many other people who are
experiencing the same difficulties and therefore both understand
and sympathise with them. In this relatively brief questionnaire,
we could make no attempt to determine whether the friends and
relations we referred to were reference groups for the respondents
in the technical sense, but in the absence of indications to the
contrary it is reasonable to suppose that they were.
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S.E.G. Lea et al. / Economic psychology of consumer debt 117
Perhaps it is as a result of these social processes that the
debtor groups have somewhat different attitudes towards debt, so
far as we were able to measure them. Our attitude scale was only
exploratory, and as such deliberately involved a heterogeneous set
of items, de- rived from a prioti considerations rather than
systematic pre-testing and item analysis. Nevertheless, it produced
a satisfactory level of reliability and no evidence of
multifactorial structure, so it is reason- able to interpret its
results. The group differences in attitudes were not large, and all
answers tended towards disapproval of debt. The result is in
agreement with data obtained by Berthoud and Kempson (1990), who
found a generally cautious attitude even to credit use. Both
results may reflect the fact that no-one really wants to be in
debt, or might simply be social desirability effects - perhaps the
right answer was too obvious in some of the questions. In both
studies, too, there is the almost inevitable problem of attitudes
research: the attitudes tested are general (e.g. approval of debt
as a whole), while the supposedly correlated behaviour is more
specific (e.g. being slow to pay the water bill). The small size of
the attitudes effect is clearly not due to correlation with other
regressors (multicollinearity), how- ever, because it emerges in
the first-order analysis of group differ- ences; nor is it any
larger within credit-rating groups than between them.
Although the effect is fairly small, it is still true that the
debtor groups are less disapproving of debt, and this is confirmed
as an independent effect in the multiple regression. As always with
an attitude measure, however, we cannot be sure whether attitudes
are causing behaviour or a consequence of it. Earl (1991) has
outlined how a process of dissonance reduction (cf. Festinger 1957)
might bring attitudes into line with behaviour once debt has been
irrevocably incurred. Once again, a different methodology will be
needed to explore this area further. An obvious move would be to
compare scores on an improved debt attitude scale with one of the
Protestant Work Ethic scales (cf. Furnham 19901, with which it
should be expected to have direct links. Debt avoidance could
reasonably be seen as a variety of delay of gratification, which
has been linked to the Protestant Ethic by social scientists from
Weber (1904/1976) to Mc- Clelland (1961).
In the context of attitudes to debt, it is worth noting the
relative youth of the debtor groups. There are two ways of looking
at this. One
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118 S. E. G. Lea et al. / Economic psychology of consumer
debt
is to appeal to a concept of hump debt, analogous to the idea of
hump saving (Harrod 1948: chapter 2). Young people are likely to
have the financial responsibility for young children, have
generally not reached peak earning capacity, and face higher
current rents and mortgage payments than those who established
themselves economi- cally two or three inflationary decades ago. On
this view, debt is something that many of this group will grow out
of as middle age brings them at least a little more financial
security. There is some support for this view in the fact that the
age effects are less clear in the multiple regressions. The
alternative view is that among this disadvantaged generation there
may be growing up a greater accep- tance of debt than earlier
generations have shown. Adverse economic circumstances can force
individuals to run up some degree of debt, and it does seem likely
that attitudes to debt will become more permissive as a result. If
at the same time, traditional social taboos against debt are being
eroded by the wider availability of credit, those attitudes might
persist when individuals economic circumstances sub- sequently
improve. The result could be a self-sustaining culture of
indebtedness. The present data give more support to the hump debt
view than to the idea of a debt culture, but do not rule the latter
out. In particular, on all measures the very oldest respondents
(the 65-74 and 75 and over groups) show marked avoidance of debt,
and this may well reflect an abhorrence of debt that was once
marked throughout British society but now no longer is.
References
Bean, L.H., 1946. Relation of disposable income and the business
cycle to expenditures. Review of Economics and Statistics 28,
199-207.
Berthoud, R. and E. Kempson, 1990. First findings from the PSI
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