People who overuse credit have different beliefs about products from those who spend within their means. Professor Marsha Richins says many people buy products thinking that the items will make them happier and transform their lives. Simultaneously such consumer materialism induces in them a disregard for debt. These two forces work together to increase credit abuse and overuse.
Wanting to buy products becomes a problem when people expect unreasonable degrees of change in their lives from their purchases. Some people tend to ascribe almost magical properties to goods—that buying things will make them happier, cause them to have more fun, improve their relationships—in short, transform their lives. These beliefs are fallacious for the most part, but nonetheless can be powerful motivators for people to spend.
Materialistic types hope for four kinds of changes when making purchases, but earlier research shows that these expectations are often not fulfilled. The four kinds of transformations expected are:
- Transformation of the self—the belief that a purchase will change who you are and how people perceive you. This is commonly held by young people and people in new roles. Example—a woman wanted cosmetic dental surgery to improve her appearance and self-confidence.
- Transformation of relationships—the expectation that a purchase will give someone more or better relationships with others. Example, a woman wanted to buy a new home because she thought it would enable her to entertain more often and make more friends.
- Hedonic transformation—a purchase will make life more fun. Example, a man wanted a mountain bike because he thought it would give him more incentive to get out and go on “an adventure”.
- Efficacy transformation—the expectation that purchases will make people more effective in their lives. Example, some people wanted to buy a vehicle because they thought it would make them more independent and self-reliant.
In proportion, none of these are a problem. They can be for people who have strong and unrealistic transformational beliefs, for then they are more likely than others to overuse credit and take on excessive debt. Other research by Fang and Mowen, 2009, and Netemeyer, et al, 1998 has also shown a relationship between materialism and gambling, and yet more by Mowen and Spears, 1999, and Ridgway, Kukar-Kinney, and Monroe, 2008, between materialism and compulsive consumption.
It is further evidence that our economic system is damaging to us, and professor Ritchins seems to agree. She thinks finance and credit counseling should be revised to help people understand their motivations for purchasing goods better, and recognize that products are not a quick fix for improving their lives:
Many financial literacy programs seek to prevent people from getting into financial problems by presenting the facts about interests rate and loans, but few seek to influence behavior directly, or focus on why people purchase things they cannot afford, and go into debt.