Materialism and Debt: a Study of Current Attitudes and Behaviors

ABSTRACT - This research was designed to examine the relationships among materialistic values, attitudes toward debt, and level of indebtedness. The findings indicate that people with high levels of materialism have more positive attitudes toward spending and debt; however, there was not a significant relationship between materialism and actual debt levels. When estimating a model of indebtedness, one demographic variable (age), one psychological variable (attitude toward debt), and one economic behavior (entertainment) were significant. Materialism was not a significant variable in the final regression equation for indebtedness.

Citation:

John J. Watson (1998) ,"Materialism and Debt: a Study of Current Attitudes and Behaviors", in NA - Advances in Consumer Research Volume 25, eds. Joseph W. Alba & J. Wesley Hutchinson, Provo, UT : Association for Consumer Research, Pages: 203-207.

Advances in Consumer Research Volume 25, 1998      Pages 203-207

MATERIALISM AND DEBT: A STUDY OF CURRENT ATTITUDES AND BEHAVIORS

John J. Watson, University of Canterbury

[This research was supported by the University of Canterbury, Grant 2313996. The author would like to thank Nathan J. Low and Keng L. Sim for their contributions in the collection and preliminary analyses of the data.]

ABSTRACT -

This research was designed to examine the relationships among materialistic values, attitudes toward debt, and level of indebtedness. The findings indicate that people with high levels of materialism have more positive attitudes toward spending and debt; however, there was not a significant relationship between materialism and actual debt levels. When estimating a model of indebtedness, one demographic variable (age), one psychological variable (attitude toward debt), and one economic behavior (entertainment) were significant. Materialism was not a significant variable in the final regression equation for indebtedness.

INTRODUCTION

Materialism has been defined as the centrality of possession and acquisition in consumers’ lives (Richins and Dawson 1992). Materialists have consistently been characterised as excessive consumers who are constantly looking toward their next purchase (Fournier and Richins 1991; Belk 1985; Richins and Dawson 1992); they relentlessly pursue material wealth and are acquisitive by nature (Belk 1985). Since acquisition most often involves spending, i has been suggested that research and theoretical models concerning debt would profit from the inclusion of materialism as a variable (Richins and Rudmin 1994). Current models of debt have included attitudinal variables (e.g., Lea, Webley, and Levine 1993; Lunt and Livingstone 1991) as well as sociodemographic variables (Davies and Lea 1995), but to date, few studies have examined the relationship between materialism and debt. This research is designed to examine the relationships among materialistic values, attitudes toward debt, and level of indebtedness.

One reason for the strong hypothesized relationship between materialism and debt relates to the widespread availability of consumer credit. In today’s society, it is no longer necessary to have money at the time of purchase to obtain desired possessions or services. With the availability of credit comes the ability to acquire things in the present and pay for them in the future. In order for people with high levels of materialism to satisfy their strong acquisitive desires, they may be more willing to take on debt (Richins and Rudmin 1994) and may therefore be more likely to have a positive attitude towards debt than non-materialistic people. This hypothesis is also supported by Duesenberry’s (1949) theory of consumption. Duesenberry proposed a theory that included social comparison as a central process in consumption decisions. He suggested that people consumed goods according to their perceptions of what was normal for their reference group. Consequently, if individuals had a high income relative to their reference group, they would be likely to save the surplus; if they had a relatively low income, they would be likely to accrue debts (WSrneryd 1989). With respect to materialism, Richins (1992) has suggested that people with high levels of materialism use people from a higher socioeconomic status (i.e., upward comparison) as referents. Accordingly, in comparison to their referents, people with high levels of materialism will have relatively low incomes and, as a result, spend beyond their means. In order to keep up with their referents, people who are high in materialism will be more likely to accrue debts.

Although there is little, if any, published research on the relationship between materialism and attitudes/behaviours toward debt, there is some work which has relevance to the topicµstudies focusing on desired income and levels of materialism. Easterlin and Crimmins (1988) examined the personal goals of high school seniors and college freshmen in 1976 and 1986. They found that in comparison to respondents from 1976, respondents from 1986 placed more importance on wealth and having a job with good earning potential, status, and opportunity for advancement. Wachtel and Blatt (1990), studying college students, found only weak relationships between desired income and traits associated with materialism. However, when Richins and Dawson (1992) measured material values in a broader cross-section of the population they found a strong relationship between materialism and desired income; the income deemed necessary to satisfy needs was about 50 percent higher for consumers high in materialism than for consumers low in materialism. Based on these findings, it could be inferred that people with high levels of materialism may be more likely (i.e., may find it "necessary") to borrow money in order to achieve their material desires. As such, they may be more willing to incur debt.

The use of materialism as an explanatory variable in the study of debt is consistent with other research in the area. Some of the earliest research on credit cards was conducted by Matthews and Slocum (1969; 1972), who used socioeconomic status to distinguish between "installment" credit users and "convenience" credit users. Later, Wiley and Richard (1975) used psychographic analysis to identify differences among heavy, moderate, and light users of credit cards. Others have used consumer attitudes (Awh and Waters 1974; Livingstone and Lunt 1993) and/or demographic variables (Srivastava, Alpert, and Shocker 1984; Lunt and Livingstone 1992) to explain differences between people in debt and people not in det.

HYPOTHESES

The previous discussion is summarized in the following hypotheses:

H1: In comparison to people with low levels of materialism, people with high levels of materialism are more likely to (a) be "spenders," (b) have positive attitudes toward debt, and (c) have larger amounts of debt.

H2: Materialism will serve as a significant predictor in models of indebtedness.

METHOD

Participants

The sample consists of 299 students from a university in New Zealand. Completion of most degrees in New Zealand universities takes three years of full time study. Quota sampling procedures were used so that approximately equal numbers of students were obtained for each class year.

Data Collection

The data were collected over a 2-week period in September, 1996. The sample was drawn from three separate sources:

1. Student dormitories. Students were approached in their rooms and asked to fill out a questionnaire, which was collected upon completion. 57 completed questionnaires were obtained using this method.

2. Introductory Marketing lecture. Second year students were given a questionnaire at the conclusion of an introductory marketing lecture. They were asked to fill out the questionnaire and return it to class two days later. 42 completed questionnaires were obtained using this method.

3. Personal approach. Students were approached on campus and asked to complete the questionnaire. The questionnaire was collected upon completion. 200 completed questionnaires were obtained using this method.

A total of 380 questionnaires were distributed and 299 completed questionnaires were received, a response rate of 79%.

TABLE 1

SUMMARY STATISTICS FOR SAMPLE AND LEVELS OF MATERIALISM

Questionnaire

The questionnaire took approximately fifteen minutes to complete and contained basic demographic items, three psychological scales, and a number of questions about the respondents’ financial position and financial habits.

Materialism scale. The Richins and Dawson (1992) scale for materialism was used in this study. Operationally, Richins and Dawson (1992) define materialism in terms of three elements: the importance of possessions and acquisition ("centrality"), the role acquisition plays in the pursuit of happiness ("happiness"), and the use of possessions as an indicator of success in life ("success"). The scale consists of 18 items encompassing the three factors. Th items were scored on a 5-point Likert format from "strongly agree" to "strongly disagree." All 18 items were summed to form an overall materialism score. Coefficient alpha was 0.79 for the "success" subdimension, 0.70 for the "happiness" subdimension, and 0.68 for the "centrality" subdimension. Coefficient alpha for the overall materialism scale was 0.83.

Spending Tendency scale. "Spending tendency" is one of seven consumer characteristics within the Consumer Personality Questionnaire (CPQ) developed by Heslin and Frey (1996). The spending tendency dimension of the scale attempts to identify the person who spends to (and maybe beyond) his or her financial limit. The low scorer may be characterised as a budgeter, someone who may be called "cheap," and a high scorer may be characterised as a spendthrift (Heslin and Frey 1996). Of the 20 items of the spending tendency subscale of the CPQ, ten items are positively related to spending tendencies (e.g., "I spend everything I earn" "I spend extra money quickly"), and ten items are negatively related to spending tendency (e.g., "I spend as little as possible" "I save as much as I can"). Items were scored on a five-point Likert format from "strongly agree" to "strongly disagree." The 20 items are summed for an overall measure of spending tendency. Coefficient alpha for the scale was 0.90.

TABLE 2

ANOVA FOR LEVELS OF MATERIALISM AND SPENDING TENDENCY

Scale of attitude to debt. The Attitude to Debt measure (Davies and Lea 1995) is a 14-item scale. Of the 14 items, seven are "pro" statements and seven are "anti" statements. Coefficient alpha for the scale was 0.65.

Other questions. The questionnaire also includes basic sociodemographic items, items about the amount and sources of the respondents’ income, their estimated weekly expenditures on a variety of items, and their debts. Expenditure was recorded in nine categories: rent, food, clothing, entertainment, travel, books, gifts, interest on loans, and "other." Debts were recorded in seven categories: government student loans, bank overdrafts, personal loans from banks, personal loans from family, mortgages, credit card debt, and "other."

ANALYSIS

The Sample. Table 1 provides a summary of the sample characteristics. The demographic characteristics of people with high levels of materialism and people with low levels of materialism were also compared to assess equality on the those variables. A median split was used to distinguish between people with high levels and people with low levels of materialism. Differences between high and low materialism groups were marginally significant for age (c²=6.55; df=3; p=0.09) and significant for employment status (c²=3.79; df=1; p=0.05). No other significant differences were found. Statistics were also run with a top quartile / bottom quartile split; no significant differences were found in any category except "employment," where the critical value was marginally significant at p=0.09.

RESULTS

According to Hypothesis 1a, respondents who score high on the Richins and Dawson (1992) materialism scale are more likely to be spenders in comparison to respondents who score low on the scale. An ANOVA was run to assess the relationship between materialism and spending tendencies. A median split was used in this and all subsequent analyses to distinguish between people with high levels of materialism and people with low levels of materialism. A median split provides the most conservative test for the hypotheses.

As shown in Table 2, the spending tendency scores were significantly higher for respondents with high levels of materialism compared torespondents with low levels of materialism (F=12.45; p=.001). This finding supports Hypothesis 1a.

Hypothesis 1b predicted that people with high levels of materialism would have more positive attitudes toward debt than people with low levels of materialism. Attitudes toward debt were measured with the Davies and Lea (1995) scale, which served as the dependent measure. In accordance with the hypothesis, highly materialistic respondents had attitudes which were significantly more favorable toward debt than respondent with low levels of materialism (F=8.46; p=.005) (see Table 3).

According to Hypothesis 1c, highly materialistic individuals should have larger amounts of debt than individuals with low levels of materialism. For this analysis, debt was calculated by summing the amounts owed personally over all sources of borrowing. Although highly materialistic people had larger amounts of debt than people with low levels of materialism, no significant differences were found between the two groups (F=0.66; p>.10) (see Table 4). This result is primarily due to the high degree of variability in the data; consequently, Hypothesis 1c is not supported.

Hypothesis 2 predicted that materialism would serve as a significant predictor in models of indebtedness. A multiple regression equation was estimated to determine the best combination of predictors for amount of debt. Demographic, economic (e.g., annual income), psychological (e.g., materialism), and economic behavior (e.g., living expenses) variables were considered in the equation. The final regression equation produced three significant predictors for the amount of money owed. One demographic variable (age), one psychological variable (attitude toward debt), and one economic behavior (entertainment) were significant predictors of indebtedness (see Table 5). The final regression equation was highly significant (F(3,290)=34.87; p<0.001), explaining 25% of the variance in amounts of money owed (adjusted for degrees of freedom; R²⁼0.26). Materialism was not a significant variable in the final equation. As such, Hypothesis 2 was not supported.

DISCUSSION

Consistent with the current literature on materialism, the results of this study show that people who are highly materialistic have more favorable attitudes toward spending as well as more favorable attitudes toward debt than people with low levels of materialism. However, questions regarding the effect that such attitudes have on behavior still remain. Although some may argue that highly materialistic attitudes will translate into a host of negative behaviors (e.g., irresponsible use of credit, excessive amounts of debt), the data collected in this study indicate that materialism may not be related to levels of debt. This is most clear when the model of indebtedness estimated in this study is examined. This model of consumer debt was consistent with earlier models which have been reported in the literature (cf., Livingstone and Lunt 1992; Lea, Webley, and Walker 1995; Davies and Lea 1995). Demographic, psychological, and behavioral variables all served as significant indicators of debt. However, materialism was not found to be a significant variable in the model. Despite the fact that people with high levels of materialism may be more motivated to acquire material possessions, in this sample they were no more or no less responsible than people with low levels of materialism regarding consumer debt.

TABLE 3

ANOVA FOR LEVELS OF MATERIALISM AND ATTITUDES TOWARD DEBT

TABLE 4

ANOVA FOR LEVELS OF MATERIALISM AND TOTAL DEBT

TABLE 5

SIGNIFICANT PREDICTORS OF PERSONAL DEBT IN THE FINAL REGRESSION EQUATION

It is interesting to consider this particular result with respect to the fact that the sample was comprised entirely of university students. In all probability the respondents behave differently from the general population. Students typically have minimal incomes and have little idea how much they will make when they graduate from college. Because of these circumstances, there may be a ceiling on debt levels for all students in general, irrespective of their level of materialism. The question then becomes, "what happens one these students leave school?" We know that differences in materialism covary with attitudinal differences toward spending and debt. Do these attitudinal differences manifest themselves in behavior once the student graduates and enters the world of full-time employment? Future research should examine this interesting issue.

Another consideration of this study relates to the fact that many students are still financially dependent on their parents, a situation which may have a substantial impact on the way respondents use their money and report their levels of debt. For example, the parents of some of the respondents may pay off a portion of their child’s debt. As a result, some students may have under-reported the total debt for which they would be responsible if they were financially independent. In order to gain a clearer understanding of the materialism-debt relationship, a sample of people who are financially independent should be used.

A final comment about this research concerns the fact that the study only tangentially addresses the question of whether levels of materialism affect how people use their money. The present study suggests that people’s attitudes toward money and spending may differ, but we still need to explore how these attitudinal differences translate into behavior. Although the effect materialism has on saving and spending patterns has been briefly discussed in the literature (cf., Richins and Dawson 1992; Richins and Rudmin 1994), there are still far more questions than there are answers in this area of consumer research. More work needs to be done.

In sum, this study is only a first step in the research needed to bridge the gap between work on materialistic behavior and the area of consumer debt. More research needs to be conducted, testing the conceptual boundaries of the construct materialism. As the area becomes more heavily researched and more closely examined, we may come to a better understanding of what materialism is, what it is not, and what effects materialistic behavior have on both the individual and society.

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