Financial management, coping and debt in households under financial strain

This study looks at how households cope financially with a budget under a certain financial strain (after the birth of a new baby), and particularly examines their financial management practices and debting behaviour. Other factors associated with debt status caused by financial strain — particularly psychological variables — are also examined. A number of indexes were calculated from questionnaire data and used to measure these variables. The results showed that being in debt was significantly associated with feelings of coping less well and with better financial management. Better coping was also significantly associated with being more ‘forwardlooking’ and having a more negative attitude towards debt. Better financial strategies were significantly associated with being less materialistic and having a more stable budget. The results confirm previous findings that psychological and behavioural variables have a considerable impact on being in or keeping out of debt, but also suggest that perceived poor coping and being in debt during a period of particular financial strain may actually lead to an improvement in financial management.     

Demographics, attitude, personality and credit card features correlate with credit card debt: A view from China

With the help of a commercial bank in China, we studied consumer credit card debt behavior² in correlation with demographics, attitude, personality, and credit card features factors. The study was conducted by using mail-in questionnaires, which were sent to credit card holders who was using or had used either revolving credit or petty installment plans. According to regression functions, we found that demographic variables and credit card features had limited explanatory power compared to attitude variables and personality variables. Specifically, we found that revolving credit use and petty installment use were closely related to attitudes about credit cards, money and debt. Risk attitude efficiently predicted petty installment use; however, it did not correlate with revolving credit use. Personality factors of self-control, self-esteem, self-efficacy, deferring gratification, internal locus of control and impulsiveness were significantly correlated with revolving credit use; on the other hand, sensation seeking, impulsiveness, and deferring gratification were correlated with petty installment use. We also found that some credit card features easily led to an “illusion of income” that facilitated consumer credit card debt behavior.     

The relationship of materialism to spending tendencies, saving, and debt

This study is a response to the Richins and Rudmin [J. Econ. Psychol. 15 (1994) 217–231] call for work examining the relationship between materialism and aspects of economic psychology. The research was designed to investigate how people with differing levels of materialism vary in their propensity to spend and/or save and their attitudes and behaviors toward borrowing money. The results indicate that highly materialistic people are more likely to view themselves as spenders and have more favorable attitudes toward borrowing. These differences were evident in behavioral measures, although the differences were strongest for behaviors related to debt rather than saving. The implications of these findings for establishing a more comprehensive view of materialism in modern society are discussed.     

Evidence for attitudinal-behavioural consistency: Implications for consumer research paradigms

Evidence is presented in this paper to show that the view of marketing communication effects promulgated by numerous marketing, advertising and consumer behaviour texts and journals should be questioned. This is the portraval of advertising, in particular, as strongly persuasive, a prepurchase influence which acts upon purchase behaviour by first operating upon and modifying mental attitudes. The latent process conception of attitude upon which this perspective is founded lacks convincing empirical support. Situational rather than inner-state variables appear to mediate behaviour and may require prior importance in explicative and predictive accounts of consumer choice. Recognition of this would require a probability conception of the attitude construct which would have profound implications for consumer research and marketing management. Above all, it suggests that an alternative psychological paradigm might he accorded a more central place in investigations of consumer behaviour.     

Changes in financial status influencing level of satisfaction in households

This study explores the impact of changes in family financial status over a four year period on level of satisfaction with various aspects of household finances. Data were collected through personal interviews with 123 families in 1982 and 1986. Information was obtained on household income, assets, liabilities, and on the satisfaction of the money managers with seven aspects of household finances. Two-tail pairedt-tests were used to compare differences in financial and satisfaction variables between the two time periods. Regression analyses were applied to ascertain factors affecting the satisfaction of the money managers. The financial status of households improved during the 4 year period as reflected by net worth. The mean net worth, with and without real estate, increased significantly during this time period. In spite of this improvement, money managers are less satisfied with various aspects of their household finances.This research was supported by the Iowa Agriculture and Home Economics Experiment Station Project No. 2773 (Journal Paper No. J-13098).Tahira K. Hira is a Professor and Alyce M. Fanslow is a Distinguished Professor in the College of Family and Consumer Sciences; Patricia Titus is an Instructor in the College of Education; all are at Iowa State University, Ames, IA 50011-1120. Dr. Hira's research interests include consumer bankruptcies and various aspects of household economic well-being Dr. Fanslow's and Dr. Titus' research interests include competencies of household money managers.     

CONSUMER DEBT STRESS,CHANGES IN HOUSEHOLD DEBT,AND THE GREAT RECESSION

This research examines psychological debt stress and changes in household debt holdings for consumers during the Great Recession using data from a monthly national U.S. household survey covering the period 2006 through 2012. Debt stress measures in the population rose by over 50% at the bottom of the recession. Determining relative stress for eight different types of household debt, we find that noncollateralized debts are more stressful than collateralized debt and that during the recession the composition of debt shifted away from collateralized debt and toward noncollateralized. Our empirical results show that women and Hispanics experienced higher measured levels of stress. (JEL D12, D18)     

'Strange money': risk, finance and socialized debt

This paper explores an essential but neglected aspect of recent discussions of the banking and financial system, namely money itself. Specifically, I take up a distinction drawn by Susan Strange which has never been fully elaborated: between a financial system that is global, and an international monetary system that remains largely territorial. I propose a sociological elaboration of this distinction by examining each category, 'finance' and 'money', in terms of its distinctive orientation to risk and debt. Money is distinguished by its high degree of liquidity and low degree of risk, corresponding to expectations that derive from its status as a 'claim upon society'- a form of socialized debt. But as Strange argued, these features of money are being undermined by the proliferation of sophisticated instruments of financial risk management -'strange money'- that, as monetary substitutes, both weaken states' capacity to manage money, and more broadly, contribute to 'overbanking'. The ultimate danger, according to Strange, is the 'death of money'. The paper concludes by exploring the implications of the distinction for sociological arguments about the changing nature of money.     

Assessing the causal relationship among communication,money management practices,satisfaction with financial status,and satisfaction with quality of life

The purpose of the study reported here is to assess the causal relationship among communication, money management practices, satisfaction with financial status, and quality of life. The data used were collected in 1986 through personal interviews. The sample size is 123 interviewees, and the unit of analysis is the household's money manager. Results show that the money managers who are more knowledgeable about financial matters, and those who are highly indebted, communicate more about money matters and report more money management activities. Satisfaction with financial status is caused mainly by economic factors (net worth and savings). The demographic factors that influence satisfaction with quality of life are marital status and household size. Satisfaction with quality of life is also predicted by income and satisfaction with financial status.This research was supported by the Iowa Agriculture and Home Economics Experiment Station Project No. 2773 (Journal paper No. 13123).Dr. Olive Mugenda is a senior lecturer Lecturer at Kenyatta University, P. O. Box 62337, Nairobi, Kenya, East Africa. Dr. Tahira K. Hira is a Professor, Department of Family Environment, Iowa State University. Dr. Alyce M. Fanslow is a Distinguished Professor, Department of Family and Consumer Sciences Education, Iowa State University, Ames, IA 50011.Drs. Mugenda and Fanslow received their Ph.D. degrees from Iowa State University, Dr. Hira received her Ph.D. degree from the University of Missouri, Columbia.Dr. Mugenda's research is in family financial management areas. Dr. Hira's research focuses on factors influencing satisfaction with households' financial status and consumer bankruptcy. Dr. Fanslow's research interest includes financial management education.     

Impulsivity and household indebtedness: Evidence from real life

Using a probit model, we estimated the role of emotional factors in determining household participation in the debt market, after controlling for such traditional economic predictors as age, level of education, income, wealth, and work status. A sample of 445 Caucasian subjects selected among fulltime employees at international asset management companies underwent the Barratt Impulsiveness Scale, the Iowa Gambling Task (IGT) while skin conductance was recorded, and a series of questions related to their demographic-socio-economic profile. Aside from confirming the role played by traditional explanatory variables commonly used as determinants of household indebtedness, results revealed the significant influence of individuals’ impulsivity in making debt decisions. Impulsivity predicted unsecured debt (i.e. consumer credit), but it was not significantly associated with secured debt (i.e. mortgages). Neither presence of a somatic marker to guide decisions nor performance at the IGT predicted real-life indebtedness decisions in this non-clinical sample. The notion that “non-rational” factors influence debt demand has been largely ignored and raises concerns about the risk of over-indebtedness for impulsive individuals.     

Settlement has many faces: physicians, attorneys and medical malpractice

We conduct an analysis of the jurisdictional dispute over the management of medical malpractice lawsuits, focusing on the process through which liability is defined. We utilize a North Carolina sample of physicians who have been sued, their defense counsel, and counsel for the plaintiff in the case. A comparison of the perspectives of these three parties reveals that over half of the physicians who settle perceive themselves as not liable. Defense counsel are more adept at predicting both negotiated resolutions and whether or not money will be paid than either plaintiffs' counsel or physicians. Almost two-thirds of physicians who thought they were not liable expressed a desire for vindication. Almost half the time when the physicians denied liability money was nonetheless paid to resolve the claim. Physician responses to the outcome of their cases focus on the need for reform, especially in terms of a call for peer or expert review. We identify and discuss culture conflict between law and medicine. For lawyers "settlement" is not a negative thing, but for physicians it implies fault. We challenge existing literature which analyzes the settlement of medical malpractice claims solely in terms of rational economic models, and we argue that social psychological variables are equally important.     

Predictors of Holding Consumer and Mortgage Debt among Older Americans

Using data from the 2000 Health and Retirement Study (HRS), this study examined the probability of older Americans holding consumer and mortgage debt. The specific objectives of this study were to identify to what extent individuals aged 65 and over hold consumer or mortgage debt and to investigate factors that influence the probability of holding consumer or mortgage debt in old age. The results of logistic regression analysis indicated that older individuals who had larger households, had higher levels of education, were aged 65–74, were married, were Black, and were employed, were more likely to hold consumer or mortgage debt. This study concluded that holding one kind of debt is associated with probability of holding another kind of debt.     

Money management in blended and nuclear families

In Finland, 9% of the families with children are blended families. Though both the absolute number and the proportion of blended families is increasing throughout Europe, there is still little research information available on how they manage their finances. Blended families are an interesting group to study because their money management is clearly more complex than that of traditional nuclear families. In this paper I examine the extent of the differences between blended and nuclear families in money management, with special reference to bank accounts and the conducting of payments. I also seek to identify factors explaining the differences discovered. The research data comes from an Internet survey conducted in November 2006, which yielded answers from 469 Finnish families with children.The results, confirming earlier findings, suggested that money management is more separated in blended families than in nuclear ones. In nuclear families, both the bank accounts and the paying of expenditures are consistently managed jointly, whereas the spouses in blended families prefer separate bank accounts and display several different practices in the paying of common expenditures. In nuclear families the adults pay the expenditures together, but in blended ones they are responsible for the expenditures of their own biological children.     

Giving time or giving money? On the relationship between charitable contributions

This paper studies philanthropic behaviour in terms of money and time contributions for charitable organisations. Using a unique dataset, which is representative of the German population, we examine the pure contributions of individuals who give either money or time as well as joint contributions of individuals who give both money and time. We find that the sequential decisions to give to charity and how much to give can be explained by different socio-economic characteristics. We report particularly pronounced gender differences among pure contributions, an interesting pattern of human capital variables such as income and education, and possible differences in the type of philanthropic goods.     

Extreme Financial Strain: Emergent Chores,Gender Inequality and Emotional Distress

This qualitative study examines the gendered division, and emotional effects, of household financial labor among severely indebted couples prior to filing consumer bankruptcy. Interviews with 19 newly bankrupt couples in Spokane, Washington, illustrate how, before bankruptcy, the peripheral and mundane chore of paying bills transforms into multiple arduous core chores: micro-management of money, debt collector negotiations, and researching and deciding to file bankruptcy. These newly emergent low-control chores are gendered and the wives’ responsibility. Gendering occurs for two reasons. Some women retain responsibility for emergent chores because husbands exhibit financial irresponsibility. Others request their husbands’ assistance, but the men refuse because the financial chores are upsetting or bothersome. Many wives who manage the newly emergent financial chores experience negative emotional effects.     

Prize Level and Debt Size: Impact on Gambling Behaviour

No studies to date have specifically determined the relationship between prize levels, debt size, and impulsivity on reported gambling behaviour on Electronic Gaming Machines (EGM). The present study reports the findings of a pilot study designed to investigate whether or not the likelihood of increasing the size of a bet was related to the level of prize offered and personal debt. The sample consisted of 171 first year psychology students (61 males and 120 females). Participants completed a series of gambling vignettes designed to elicit data on reported bet size according to different prize levels and debt sizes; the Eysenck Impulsivity Scale (Eysenck and Eysenck 1977); the Canadian Problem Gambling Index; and an author-constructed questionnaire eliciting data on demographic and gambling behaviours. Results indicated that as prize levels increase the odds (relative risk) of an individual placing a bet on an EGM and the amount of money reportedly bet tends to increase. A negative relationship between debt size and reported gambling behaviour moderated by prize level was found. No differences were found in the odds of placing a bet according to impulsivity. It was concluded that prize and debt sizes do influence propensities to gamble and level of bets. The findings have implications for restricting jackpot and general prize levels as a responsible gambling strategy designed to reduce motivations to gamble.     

MONEY, CREDIT, and WAGES IN HYPERINFLATION: POST-WORLD WAR I GERMANY

An important feature of the German hyperinflation is the way in which accelerating monetization of both government and private debt by the Reichsbank fueled the inflation process. The stimulus to private credit demand arising from more rapid adjustment of money wages over this period is often ignored, however. The present empirical results strongly support the importance of wage pressures in augmenting fiscal influences on nominal money growth during 1920–1923. Our findings also suggest that wage claims provided the main conduit through which higher inflationary expectations were accommodated by faster rates of monetary expansion.     

A study of the consumption of Chinese online fortune telling services

This study examines consumer behavior in the online fortune telling market. Both quantitative and qualitative data were collected and analyzed through a content analysis of websites, in-depth interviews with website owners, and online consumer surveys. Focus group discussions were conducted to uncover a general profile of and the motives for users who visited fortune telling websites in Taiwan, Hong Kong, and mainland China. In addition, a survey of 6,088 members of major fortune telling websites was conducted in order to identify a dynamic psychological model to explain online fortune telling behavior and attitudes. Three types of explanatory variables were used as predictors – demographics, psychological orientations, and motivations. Results from the analyses indicate that the majority of users were attracted to the fortune telling websites by free trial services. Personal relationship fortunes were the most popular service item consumed by both male and female users. Some consistent patterns regarding the effects of the predictor variables on online fortune telling behavior and attitudes were reported and discussed. The three types of predictors in question all contributed to different online fortune telling behavior and attitudes. Results and implications are reported and discussed.     

Psychological aggression in dating relationships: predictive models for males and females

Variables related to the use of physical aggression in dating relationships and conflict management strategies were used to predict the use of psychological aggression in courtship. Individual factors (i.e., variables associated with threat susceptibility) and situational variables (i.e., relationship length and emotional commitment to the partner, conflict management strategies, and weekly alcohol intake) were proposed to be important in the prediction of male's and female's use of psychological aggression with their partners. Our findings suggest that these variables successfully predict the use of psychologically aggressive acts in courtship. Further, interactions with sex of participant suggest that different variables are important in the prediction of males' and females' use of such negative behaviors. These differences in the relationships between the predictors and criteria for males and females suggest not only divergent predictive models but also potential motivational differences in the employment of such tactics.     

The effects of economic circumstances on British students' mental and physical health

Three-hundred sixty British university students completed a questionnaire providing information on demographic characteristics, financial circumstances, smoking, and drug and alcohol use. A 14-item inventory of physical symptoms, the short form 36 health survey (SF-36), and the General Health Questionnaire (GHQ-12) were used to assess their physical and psychological well-being. Except for physical functioning, all subscales of the SF-36 and the GHQ indicated levels of health significantly below population norms matched for age and sex. Poorer mental health was related to longer working hours outside the university and difficulty in paying bills. Students who had considered abandoning study for financial reasons had poorer mental health, lower levels of social functioning and vitality, and poorer physical health as indicated by variables on the SF-36. They were also heavier smokers. Students' personal debt was significantly associated with their knowing people involved in prostitution, crime, or drug dealing to help support themselves financially.