The relationship of materialism to spending tendencies, saving, and debt
Introduction
The importance of consumer spending in relation to the economy and the role that materialistic tendencies play in consumption would dictate that an understanding of the relationship between materialism and spending/saving tendencies has great relevance to economic psychology and should elicit more interest from researchers (Richins & Rudmin, 1994). Although a considerable amount of analysis has focused on materialistic behavior (cf. Belk, 1985; De Tocqueville, 1835; Ger & Belk, 1996; Heilbroner, 1956; Holt, 1998; Richins, 1994; Richins & Dawson, 1992; Veblen, 1899), researchers have only begun to examine whether materialism may be instrumental in helping explain the wide variation observed amongst individuals and families in savings and credit utilization behavior (cf. Richins & Rudmin, 1994).
Both consumer spending/saving tendencies and consumer orientations toward credit have important implications for the strength and growth of the economy at the macroeconomic level and for individual financial management at the microeconomic level (Katona, 1975; Magrabi, Chung, Cha, & Yang, 1991). The growth of consumption explains about 80% of the average quarterly growth of the gross national product (GNP) in America (Maital, 1982). With a nominal GNP in excess of $5000 billion, an aggregate change as “minimal” as 1% in the income consumers devote to savings or consumption could mean the difference between strong economic markets and a recession. At the microeconomic level, consumers in developed countries are borrowing money at unprecedented levels. In the UK, household sector debt has increased from £ 574 billion in 1997 to £ 666 in 1999 (Hansard, 2000). In Canada in 1998, average personal debt was greater than average disposable income for the first time since Statistics Canada began keeping such records in 1961 (Chisholm, 1999). And in the United States, nonmortgage debt in 1998 was $1.3 trillion, or about $4600 for every man, woman, and child in the country (Gray, 1998). As the number of credit cards, credit card limits, and the level of demographically initiated credit card debt have increased, so too have the number of bankruptcy filings (Weller, 1997). As such, an examination of the relationship between materialism (defined as a value as per Richins & Dawson, 1992) and aspects of individual financial management or, more specifically, between materialism and attitudes/behaviors related to both saving and spending seems prudent. Consequently, the research question guiding this study is:
How do people with differing levels of materialism vary in (a) their propensity to spend and/or save and (b) their attitudes and behaviors toward borrowing money?
Section snippets
Materialism and the tendency to save/spend
A materialistic lifestyle appears to be an integral part of modern living for developed countries. The consumption ethos of modern culture dictates that satisfaction of many (some may argue most) of our needs are met through consumption. We buy things and use our money to satisfy our survival needs (such as food and shelter), to establish our social significance with the power and prestige that money and possessions represent (Fugua, 1990), and to compensate for individual shortcomings such as
Instruments
In order to address the research question and examine the hypotheses discussed above, it was necessary to determine respondents’ levels of materialism, their propensity to save/spend, and their attitudes and behaviors toward borrowing. The instruments used to measure each of these variables are described below.
Materialism
The Richins and Dawson (1992) materialism scale was used to measure individual levels of materialism. Operationally, Richins and Dawson (1992) define materialism in terms of the
Defining materialism groups
Respondents who scored in the top quarter of the Richins and Dawson (1992) materialism scale were categorized as having high levels of materialism, and respondents who scored in the bottom quarter of the scale were categorized as having low levels of materialism. The demographic characteristics of the resulting high and low materialism groups were compared to assess equality on these variables. Analyses indicate that there is no significant relationship between materialism and income, gender,
Discussion
The objective of this study was to examine 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 findings suggest that there is a positive relationship between materialism and the tendency to spend, although this relationship seems to be strongest with respect to attitudes toward spending rather than actual spending/saving behavior. In addition, highly materialistic respondents had more
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