Part 3: Families’ behaviour
The study of indebtedness within the realm of economic psychology is relatively recent, with the first articles appearing from 1989 (Lunt, 1995). However, the traditional theory of savings has alluded to the influence of psychological factors for some time. Psychological factors are now considered to play a key role in financial decision-making.
Lunt and Livingstone (1991), for instance, have found that psychological factors are important in the saving process, predicting the amounts people put aside for regular savings, but not the total amounts saved. When comparing those with and without regular savings in the United Kingdom, they found that psychological variables helped explain 16 percent of the variation in amount saved, in addition to the 48 percent explained by economic variables. However, demographic variables did not help explain any variation.
Cameron and Golby (1991) suggest various psychological factors may be involved in becoming financially overcommitted, such as:
- cognitive errors, where the limited information-processing capability of the human brain means that people can simply make bad choices
- motivational errors – for example, where people try to maintain a particular image of themselves despite their financial circumstances
- deviance, such as obsessive-compulsive or addictive behaviours.
Psychological factors can influence financial decision-making through the development of habits (basic budgeting approaches such as living within your means) and heuristics (basic rules of thumb such as saving 10 percent of gross income). Traditional savings theory recognises that some people save simply because it is what they are accustomed to doing, were taught to do or observe other people doing, or because they receive money that is surplus to requirements. Such behaviour suggests, however, that not much thought is put into the amount people need to save to finance their lifetime consumption needs. This may help explain why, contrary to the life-cycle model, we may observe some people not saving enough for retirement. It follows, then, that people may borrow because they do not have a saving habit or that their saving heuristics do not provide for their needs or wants.
Psychological factors can also lead to the development of coping mechanisms (strategies or behaviours adopted to avoid or encourage a particular course of action), which imply a much more deliberate or conscious approach to financial decision-making. Lunt and Livingstone (1991) have observed, for instance, that savers tend to shop in a few favourite shops using a fixed strategy, in contrast to non-savers who shop around using a flexible strategy.
Part 3 thus explores what is known about the influence of psychological factors on financial decision-making behaviour (habits, heuristics and coping mechanisms) and outcomes. The pyschological factors discussed in this part can be thought of as falling into two groups: personality variables and environmental variables.
Personality variables include:
- locus of control (the degree to which people consider they are in control of their own life and actions)
- aspirations (the degree to which people form aspirations based on comparisons with others)
- self-control (the degree to which people are impulsive or do not stick to long-term goals).
- Significantly, while those in debt believe that credit is a useful way of obtaining things without having to save up, they are also more likely to attribute their financial problems to the credit system. Thus they tend to blame the convenience of credit and high credit limits as well as those internal factors which centre on personal control, such as lack of self-discipline and careless budgeting. They also attribute their problems to their pleasure in consumption, such as enjoying shopping and greed. Those in debt are more likely to endorse the locus of control item in which they feel they drift along according to old habits. Similarly, they feel less in control of their finances, make more impulse purchases, and hence say they find it easier to get into debt (p 128).
- context relativity (the degree to which people’s decisions are influenced by the context in which they are presented)
- shared experiences (the degree to which people’s decisions are influenced by the experiences of family and friends)
- family decision-making (the degree to which people’s decisions are influenced by family processes and priorities)
- consumer socialisation (the process by which people develop an understanding of the economic world)
- aggressive lending and advertising (the degree to which people’s decisions are directly influenced by the actions of others).
Finally, this part should be regarded as exploratory rather than authoritative, as the literature deserves a much closer examination than has been possible for this report.
Locus of control
According to one study, “… the most powerful explanation of the level of debt appears to be [general] locus of control, a factor not normally included in studies of household behaviour…” (Cameron & Goldby, 1991, in Valins, 2004, p 43). Locus of control applies to an individual, since each person has a locus of control as part of their personality.Locus of control is a personality variable related to how much people believe their lives are under their own control. Those who are said to possess internal locus of control believe they determine what happens to them and that they can change or influence the course of events. Others, said to have external locus of control, feel that the cause and control of events in their lives lie outside their abilities, and attribute what happens to them to the external environment. People with external locus of control feel they have little control over how their life evolves and believe that life experiences happen from the ‘outside-in’. They tend to take less responsibility for their actions than those with internal locus of control, and place responsibility on some known or unknown force out of their control such as chance, fate, powerful others, the government or God. Those with internal locus of control tend to be more self-reliant, independent and confident in themselves and their abilities. They show more initiative, make more effort in controlling the world around them, and tend to control their own impulses or urges better than people with an external locus of control (Pinto, Mansfield, & Parente, 2004). Locus of control therefore includes but is not limited to the concept of self-control, discussed later.
A scale to measure locus of control was first developed in 1961, but many general measures have subsequently been developed, as well as specific scales, such as those developed for use with children. Locus of control can be measured in relation to various aspects of behaviour, such as consumer behaviour or innovation.
In 1986, Furnham applied the locus of control concept to economic behaviour, deriving a scale to measure Economic Locus of Control (E-LOC), which is more specific than general locus of control measures and contains five factors (internal chance, external chance, provider control, powerful others and nature of the problem).
Busseri, Lefcourt, and Kerton (1998) constructed a Consumer Locus of Control scale and found it was a significant predictor of consumer behaviour ranging from impulsive to strategic. Measures of economic and general locus of control proved to be unrelated to shopping effort, planning and product knowledge. The more internal the subjects’ consumer control beliefs, the more likely they were to plan and be purposeful in the act of shopping. This research suggests that specific measures could be developed, and people could be tested for locus of control in respect of various economic behaviours such as saving, retirement planning and financial literacy.
Overseas evidence
Furnham (1986) successfully used E-LOC to differentiate between unmanageably indebted individuals and control groups; the former group was more likely to have external E-LOC. Furthermore, E-LOC was found to have greater validity than general locus of control measures in differentiating participants with high discount rates (preferring consumption in the short term) and low discount rates (focusing on longer-term goals) for financial outcomes. In other words, those with external E-LOC are more likely to have high discount rates as well as unmanageable debt. The findings were extrapolated to personal loss, business gain and business loss conditions. The author notes, however, that an external E-LOC may be the result of financial difficulties or vice versa, and that future investigation is needed to uncover the causal relationship. As a starting point, they also noted that substance abuse recovery has been associated with both increased internality and a lowering of discount rates (Plunkett & Buehner, 2007).Lunt and Livingstone (1991) compared those who saved regularly and those who did not in the United Kingdom and found that savers have more internal locus of control than non-savers, while non-savers tend to be fatalistic. In general, savers believe in personal control over finances, in budgeting and in keeping things simple, whereas non-savers tend to make life more complicated and feel less under control.
Livingstone and Lunt (1992) found that those in debt are more likely to attribute their financial problems to the credit system, in the form of blaming:
- the convenience of credit and high credit limits
- internal factors relating to control, such as lack of self-discipline and careless budgeting
- their pleasure in consumption
- their greed
- their tendency to drift along according to old habits.
Locus of control has not been found to differ significantly with gender in the United States, but there may be differences for specific categories of locus of control. For example, men may have a greater internal locus for questions related to academic achievement. Hayes researched the E-LOC of university students in the United States and found that females tended to feel less personal control over positive outcomes than male students (Hayes, 2006). They also found that this was the only significant finding among tests for gender, culture and class rank. Using a separate measure for ‘financial strain’, however, the study also found that female students tended to feel less disruptive interference caused by money in their relationships compared to male students; have lower scores on financial education and awareness; but also to have significantly less difficulty meeting their financial responsibilities than males.
Research has shown mixed and inconclusive findings as to the correlation between locus of control and race or ethnicity. Some studies point to a correlation between the two – for example, that minorities (particularly African Americans) are more likely than European Americans to report an external locus of control. However, the relationship between minority status and locus of control is complex and is not as yet completely understood.
One possible explanation for these results, offered by Perry and Morris (2005), could be differences in beliefs, or expectations of unfair or discriminatory treatment. Because of historical discrimination in employment and financial markets, members of minority groups may be more sensitive to negative and unforeseen events. Thus, even when they have an external locus of control, members of minority groups may be more likely than others to control their spending and save money in order to protect themselves against bad luck or powerful others.
Perry and Morris also found that locus of control mediates the effects of both financial knowledge and income on responsible financial management behaviour. Evidence of race and ethnicity as moderators is mixed, as these findings suggest that the effects of financial knowledge, locus of control and income may differ for African American and to a lesser extent Hispanic and Asian consumers. It is important to note that despite evidence of statistical significance, the regression coefficients and thus the magnitude of the effects reported are small (Perry & Morris, 2005).
This report has not examined any literature on the interaction between culture and locus of control; however, one might expect more individualist cultures to have a higher proportion of ‘internals’ than ‘externals’. This report has also not examined any literature on empirical differences between countries’ proportions of ‘internals’ to ‘externals’. Both topics would be interesting to explore further.
Studies show that the development of locus of control is associated with family style and resources, culture and experiences with effort leading to reward. ‘Internals’ have been found to grow up in families that model typical ‘internal’ beliefs such as effort, education, responsibility and thinking. Parents typically gave children rewards they had promised them. In contrast, ‘externals’ are typically associated with lower socio-economic status, because poor people have less control over their lives (Schultz & Schultz, 2004). Findings from early studies on the familial origins of locus of control were summarised by Lefcourt: “Warmth, supportiveness and parental encouragement seem to be essential for the development of an internal locus of control.” (Lefcourt, 1976, p 100). Environmental factors are discussed further below.
Aspirations
In addition to the practical or financial reasons for why people save, traditional savings theory suggests that people may also save for a range of aspirational reasons, including being financially independent, aspiring to a particular lifestyle based on their preferences and starting a business.Cameron and Golby (1991) suggest the aspirational motive can be explained by social comparison theory. In particular, they use it to describe an aspirational behaviour known as ‘keeping up with the Joneses’. Duesenberry (1949) recognised the social comparison process[15] as an important mechanism in both saving and borrowing, proposing that people save any money left over from expenditure necessary to keep up with their social reference group, and that people borrow in order to acquire goods necessary to keep up with their reference group.
Wood (1989) finds other reasons for people to compare themselves with others – for example, that others may be their competitors, or because the comparison adds to one’s self-definition. Wood also finds that comparisons with others who are similar on any of several dimensions such as age, sex, race, college major and personality, have more impact on one’s self-esteem than do comparisons with dissimilar others.
Lea, Webley, and Levine (1993) found that the conditions exist for a ‘self-sustaining culture of debt’ and that, consistent with social comparison theory:
- Serious debtors were less likely to claim Nonconformist, Agnostic or Atheist religious views, and 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 were less likely to think that their friends or relations would disapprove if they knew they were in debt (p 85).
Overseas evidence
Canova, Rattazzi, and Webley (2005) found that 97 British adults named 15 reasons for saving which functioned hierarchically. More concrete or materialist goals such as ‘purchase’, ‘holidays’ and ‘money availability’ were at the bottom of the hierarchy, while at the top were more abstract goals of ‘self-esteem’ and ‘self-gratification’. In the middle were goals which channelled the more concrete towards the abstract.Watson (2003) measured behaviour by variables such as self-esteem, self-worth, self-image, identity and social status, and found that highly materialistic people are more likely to view themselves as spenders and have more favourable attitudes to borrowing. The more materialistic individuals are, the more credit cards they own, the more the finance charges are on those credit cards and the more likely they are to have loans of more than $1,000 (Watson, 2003).
Livingstone and Lunt (1992) also found those in debt considered that enjoyment requires higher consumption and therefore lower savings, while savers did not consider this to be the case.
Despite this, there is evidence of a negative association between materialism and happiness. Van Boven found that the more people aspire to materialistic goals, the less satisfied they are with life and the more at risk they are of developing psychological disorders. Furthermore, allocating discretionary resources in pursuit of life experiences was found to make people happier than pursuing the acquisition of material possessions (Van Boven, 2005).
This may explain why Livingstone and Lunt (1992) found that “those who owed more were more likely to disagree that keeping up with the [Joneses] was a source of pressure for them and hence a cause of their financial problems” (p 131). Amongst their responses, however, this group “did not identify any other cause of their problems which differed from those less in debt” (p 131) and the authors suggest that “this apparent tendency to deny the operation of social comparison processes might be investigated further” (p 131).
They also found that those in debt not only experience pleasure in consumption but also express their social worth and social relations through consumption, buying presents for themselves and others as rewards or bribes. Debtors also tended to talk more about money with friends, suggesting that social relations partly centre on consumption as a topic of mutual interest and value. This pattern of social relations may be both cause and effect of a general dissatisfaction and disappointment experienced by debtors in their standard of living. The authors comment that being in debt appears linked to socio-psychological participation in consumer culture more generally. They observe that while having similar resources to those in debt, those not in debt are less likely to reward or bribe with purchases, talk about money with friends, feel dissatisfied with circumstances or find pleasure in shopping (Livingstone & Lunt, 1992).
Yurchisin and Johnson (2004) found that compulsive buying behaviour was negatively related to self-esteem and positively related to perceived social status associated with buying and materialism. While compulsive buying behaviours are believed to affect only one to five percent of consumers, studying this extreme behaviour enables the association to be made (Earl & Kemp, 1999).
Self-control
Behavioural economists have developed a ‘hyperbolic consumption model’ (based on economic life-cycle theory) to represent self-control problems (or ‘irrational’ consumer behaviour). According to this theory, ‘hyperbolic’ consumers are like their ‘exponential’ counterparts in that they prefer instant gratification over achieving long-run goals (in other words, they have high discount rates or prefer consumption in the short term). Unlike their exponential counterparts, however, hyperbolic consumers also have time-inconsistent preferences – that is, their preferences change depending on whether they are asked what trade-off they would make now or in the future.In addition to discount rates and preferences, the role of expectations (or expectations of future happiness) in rational choice theory has been challenged in order to explain some observed self-control problems such as use of goods like cigarettes that bring immediate benefit, but have a potentially serious future cost, or shunning personal investment that brings immediate cost but future benefit (Clark, Poulton, & Milne, 2003).
Impulsivity is associated with problems such as addiction and criminality (Farrington, 1995). It is generally assumed that personality traits such as impulsivity are resistant to change, but one quantitative review of longitudinal studies (Roberts & DelVecchio, 2000) showed that delay of gratification is one of the personality traits most susceptible to change with adult experience.
Overseas evidence
Neuroscientists have recently isolated the brain circuit involved in thinking twice and checking impulsive action. “Our results provide the first clear neuroscientific basis for the widely held view that people can refrain from doing something even if they genuinely wish to do it.” (Brass & Haggard, 2007, p 9144).Although not perfect, the hyperbolic discount function helps explain a wide range of anomalous economic choices including procrastination, addiction, self-deception, sub-optimal retirement timing, the design of contracts by profit-maximising firms and under-saving. The theory also offers explanations for a number of apparent anomalies in household financial decision-making:
- Households with hyperbolic discount functions tend to hold their wealth in an illiquid form, since such illiquid assets are protected from consumption splurges.
- Households with hyperbolic discount functions are very likely to borrow on their credit cards to fund instant gratification.
- Since hyperbolic households have little liquid wealth, they are unable to smooth consumption, generating a high level of co-movement between income and consumption (Angeletos, Laibson, Tobacman, Repetto & Weinberg, 2001).
Perhaps surprisingly, Pinto et al’s study does not support previous studies showing that the psychological factors of self-esteem and locus of control were inversely related to shopping behaviour and credit card spending. Regardless of their type of credit card use, the students reported very high self-esteem and stronger internal locus of control. This suggests that there may not be a linear relationship between locus of control, aspirations and self-control.
The authors note that this may be because of the uniformity of the college-student sample and self-reporting reflecting a change in locus of control and aspirations rather than an absolute level. This is consistent with studies indicating increases in students’ self-esteem and a shift from external to internal locus of control during the college years.
New Zealand evidence
Data from the Dunedin Longitudinal Study have been used to test the hypothesis that poor life expectations caused by low initial wealth will make addictive goods more attractive and investment goods less attractive. In this study, wealth was defined in terms of liquid assets and non-pecuniary wealth such as family and social cohesion, good health, social status and school or work achievement. Smoking, hazardous drinking and physical exercise were tested. Pessimistic expectations (significantly inversely correlated with broad wealth) significantly raised the likelihood of frequent smoking and less frequent exercise, but not of hazardous drinking (Clark et al, 2003).Context relativity
Vlaev, Chater, and Stewart (2007) investigated the context relativity principle, which suggests that risky prospects are judged relative to accompanying prospects, and found that, when asked to make several choices at once, people tend to diversify. Evidence of this phenomenon (also known as the diversification bias) has been found by studying how people allocate their retirement funds across various investment vehicles. The idea is that an employee who is offered a number of funds to choose from divides the money equally among the funds offered. This implies that an investor’s chosen asset allocation will depend strongly on the array of funds offered. Therefore, in a plan that offered one stock fund and one bond fund, the average allocation would be half to each, but if another stock fund were added, the allocation to stocks would jump to two-thirds.Vlaev et al also quote research showing that when individuals are presented with three choices ranging from high to low risk, they had a significant tendency to pick the middle choice, thereby avoiding extremes. This confirms that when choices are difficult, people may resort to simple ‘rules of thumb’ to help them cope, such as the rule that it is best to avoid extremes.
This research clearly illustrates that savings and risky investment decisions can be influenced by manipulating the context in which the options are presented. In this way, savings rates could be increased and investment risk encouraged. Savings choices were shown to be more context-dependent than risk choices. These and similar findings mean that people tend not to independently and autonomously make optimal decisions about their financial future.
Influence of socio-economic group
Sawady and Tescher (2008) investigate borrowers’ use of heuristics in the form of an alternative rationalilty based on shared experiences. This contrasts with the traditional notion of economic rationality, which assumes that individuals make choices that maximise economic utility. A multi-state United States bank and a mid-sized regional credit union conducted market research to help them reach and serve low-income consumers better. The authors’ analysis suggests that low-income individuals have a common reasoning system, which is shaped by their shared experiences. This reasoning system is based on ideas such as:- poverty leading to a short-term focus, because poverty is associated with constantly changing and frequently unpredictable circumstances. Despite this, low-income people still revealed a universal need to be successful, use cheques, have savings, understand credit, buy a home and provide for their children’s future.
- the formal financial system being perceived as uncaring and disrespectful by low-income people. Many low-income people feel that banks are for ‘people with money’. Banks’ practices of offering services that do not fit the customer’s needs contribute to a sense of alienation. Identification checks are interpreted as discrimination and overdraft fees considered betrayal. By contrast, the informal cash economy, including fringe lenders, is familiar, easy to understand and does not lead to rejection. The high fees and stigma of fringe lenders are recognised, but tolerated to avoid possible rejection and disrespectful treatment.
- a deep mistrust of mainstream practices. For example, hidden fees were interpreted as messages of exclusion and the breaking of an agreement. In narrow informal networks, social capital reduces transaction costs and increases the significance of repeated transactions. This kind of social capital correlates negatively with people’s trust of mechanisms outside the immediate network, such as use of cheques, formal lenders and share-market investments.
Family decision-making
Research suggests that some consumer decision-making styles are common to more than one culture, but that there are some cultural differences (Hafstrom, Chae, & Chung, 1992). In 1992 one team of researchers commented that family decision-making is one of the most under-researched and difficult areas to study in all of consumer behaviour (Wilkie, Moore-Shay, & Assar, 1992). It appears that this area is still largely under-researched with very little, if any, research having been undertaken since 1992 on family decision-making in relation to debt.Overseas evidence
Walker (1996) confirmed previous findings that psychological and behavioural variables have a considerable impact on being in or keeping out of debt, but also suggests that perceived poor coping and being in debt during a period of particular financial strain (such as the birth of a baby) may actually lead to an improvement in financial management.New Zealand evidence
Koloto and Katoanga (2007) studied 268 Pacific households in New Zealand, which included 520 ‘family groups’.[16] Almost two-thirds (62 percent) of the respondents reported that their decision-making approaches were changing either a lot or some of the time. The types of approach used included decision-making by the head of the household with or without adult household members collectively, and with or without adult household members taking responsibility in assigned financial areas.Consumer socialisation
Consumer socialisation (also economic socialisation) is a specific concept referring to the process by which a child develops an understanding of the economic world.Overseas evidence
Moschis (1985) found that the family context of interpersonal communication is believed to have the greatest influence on consumer socialisation. An interesting experimental study in this area showed that children who did not ordinarily receive pocket money spent more in credit than those who did get a regular allowance (Abramovitch, Freedman, & Pliner, 1991, in Earl & Kemp, 1999). Parental behaviour (such as discussing financial matters with children) and parental orientations (conscientiousness, future orientation) have also been shown to have a weak but clear impact on children’s economic behaviour as well as on children’s economic behaviour in adulthood (Earl & Kemp, 1999).There are age-related changes in the level and forms of children’s saving. In one experiment, six-year-olds saved only because they thought they ought to. Older children perceived the value of saving as a strategy to protect one’s assets from external or internal threats (such as being robbed or succumbing to temptation). Another study found that older children saved because they anticipated a generalised need for money in the future (as opposed to saving for concrete targets) and were more likely to use a savings account (Earl & Kemp, 1999).
Discount rates (one’s preference for current consumption over future consumption) are found to rise with the age of the household head. This result confirms the hypothesis that older consumers have shorter time-horizons and hence higher discount rates. Cole and Fuller (1980) found that, in energy markets, the youngest consumers had the lowest discount rate, which is consistent with the findings of Arthur D. Little’s (1984) analysis. However, they did not find that the oldest consumers have significantly higher discount rates than younger ones.
Pinto et al (2004) suggest parental styles, family communication, consumer socialisation and media influence (discussed below) are potential antecedents to development of credit attitudes.
Perry and Morris (2005) call for exploration of the antecedents of financial knowledge and the most effective ways for consumers to acquire this knowledge. They consider that, to understand how to prepare consumers for responsible decision-making better, future research should explore underlying sources and influences that affect financially-oriented values and beliefs.
Aggressive advertising and lending
There is little research on how aggressive lending and advertising practices affect people’s financial decision-making practices and contribute to problem debt.Overseas evidence
Norvilitis, Szablicki, and Wilson (2003) found that students with credit cards from on-campus solicitation had higher debt-income ratios than those with credit cards from other sources.New Zealand evidence
While aggregate credit card debt is significant and rising (Reserve Bank of New Zealand, 2006), aggressive targeting of students does not appear to be a significant issue in New Zealand, perhaps because of the accessibility of the student loan scheme.There is, however, concern that irresponsible lending and easy credit are partly to blame for problem debt, with advertising along the lines of “you need to have it”, “you can afford it”, “buy now, pay later”. The Ministry of Consumer Affairs has explored fringe lending in South Auckland and concluded that Pacific consumers are disproportionately affected and aggressively targeted by fringe lenders, and that protection may mean making credit hard to get (Coxson & Anae, 2007). The report notes (section 2.2):
- There is consensus amongst all respondents that ‘people don’t save up for anything anymore’, that Pacific consumers tend to just go out and buy goods and services on credit. Bolstered by influential advertising and aggressive marketing to Pacific consumers, and the availability of ‘instant cash, no questions asked’, these respondents perceive that the culture of easy credit and consumption has taken a stranglehold on all tiers of Pacific society. This desire for instant cash to provide instant gratification seems to cross-cut young/old, NZ/island-born, unemployed/beneficiary/professional, male/female divisions (p 105).
Summary
Evidence suggests that people’s savings and debt decisions are influenced by several personality and environmental variables, which may result in the development of habits, heuristics and coping mechanisms.Recognising these habits, heuristics and coping mechanisms and understanding what influences them should help us predict and influence financial behaviour. Environmental variables are particularly appealing because they may be more amenable to change. The role that family, parenting and communication styles plays in consumer socialisation, and in family decision-making more generally, has emerged as a significant research gap.
Locus of control, aspirations and self-control have all emerged as key personality variables that warrant further investigation.
Having an external locus of control (particularly an external economic locus of control, or E-LOC), having aspirations based on comparison with others or having poor self-control (a tendency to be impulsive) suggests one is more likely to have a spending than a saving habit. These traits may be significant factors influencing whether a family becomes financially better or worse off over time. Further research on gender and age differences in these variables is required, as is an understanding of the interplay between these variables in a group or family decision-making setting. For example, where in a two-parent family one partner has an internal E-LOC and the other an external one, it may be in the family’s long-term interests for each to be aware of their tendencies, strengths and weaknesses and to empower the internal partner to make decisions about the family’s finances.
These variables are summarised in Table 1. It should be noted that while the table suggests a linear relationship between these variables – namely that someone who has external locus of control is likely to have aspirations based on comparison with others and low-self control, and thus be more likely to use debt and be susceptible to problem debt – the study of students by Pinto et al (2004) cautions against taking too simplistic an approach.
Table 1: Personality variables that influence financial decision-making
| Locus of control orientation | Internal
|
External
|
| Aspirations | Less concerned with status Aspirations are more abstract High self-esteem, self-worth |
Based on comparisons with others Aspirations are more material Low self-esteem, self-worth |
| Self-control | High Patient Thinks before acting |
Low Impulsive/prefers instant gratification Acts before thinking |
| Saving/borrowing behaviour | Savers | Borrowers |
| Outcomes | Wealthier? | Poorer? |
Footnotes
- [15]
- Social comparison processes (usually discussed in psychology literature) include the desire to affiliate with others, the desire for information about others and explicit self-evaluation against others. [Return to reference]
- [16]
- A ‘family group’ included one or two adults and their dependent children if any. Thus a single adult could be a family group, as could a couple with or without dependent children, whether their own or not. Under such a definition, extended family households included more than one ‘family group’, with the average in the households studied being 1.94 groups. [Return to reference]