Journal of Economic

North-Holland

Psychology

8.5

14 (1993) 85-119

The economic psychology of consumer debt

Stephen

E.G. Lea, Paul Webley

and R. Mark Levine

Universityof Exeter, Exeter, UK

Received

February

6, 1992; accepted

August

31, 1992

Questionnaires
were distributed
to groups of people with either no debt, mild debt, or
serious debt to a public utility company.
Serious debtors were found to differ from the
Non-debtor
group on economic, sociological,
and psychological
variables: economic resources,
economic need, social support, attitude forming variables and attitudes all made independent
contributions
to the prediction of group membership
and the extent of self-reported
debt. Mild
debtors were generally
intermediate
between
Non-debtors
and Serious debtors.
Debt was
strongly correlated
with economic factors. Many results indicated that debt is a consequence
of
adverse family economic conditions:
Serious debtors were of lower socioeconomic
class, had
lower incomes, were less likely to own their own homes (and much less likely to own them
outright), had more children and were more likely to be single parents. They were also younger.
Social and psychological
factors were also found to be related to debt: Serious debtors were less
likely to claim Nonconformist,
Agnostic or Atheist religious views, and they 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 they were less likely to think that
their friends or relations would disapprove if they knew they were in debt. Multivariate
analyses
showed that economic, social and psychological
variables all had independent
correlation
with
debt. These results suggest that debt is stronly influenced
by adverse economic circumstances,
but that social and psychological
factors are also important.
The conditions for the development
of a self-sustaining
culture of debt do exist.

Introduction
Compared with many other
been relatively little explored

kinds of economic behaviour, debt has

from a psychological
standpoint.
The

Correspondence
too:S.E.G. Lea, University of Exeter, Dept. of Psychology, Washington
Singer
Laboratories,
Exeter EX4 4QG, UK.
* We would like to thank Welsh Water plc for their financial support for this research,
and
particularly
Noel Hufton, Jeffrey Phillips and Wayne Rees for their interest and practical help.
We are also most grateful to Nicola Crichton and John Hinde for statistical advice, to Cathy
Walker and Emma Davies for background
research and much discussion, and to an anonymous
reviewer for much helpful advice. An earlier version of this paper was presented
to the joint
meeting of the International
Association
for Research in Economic Psychology and the Society
for the Advancement
of Socio-Economics,
Stockholm, June 1991.

0167-4870/93/$06.00

0 1993 - Elsevier

Science

Publishers

B.V. All rights reserved

86

S.E.G. Lea et al. / Economic psychology of consumer

debt

extent of consumer indebtedness

has caused some public and political
concern (e.g. Leigh-Pemberton
1989), accompanied
by speculation
about its origins in individuals circumstances
or attitudes. But only
recently has there been any systematic study of the social and psychological background
to debt (e.g. Berthoud
and Kempson 1990, 1992;
Ford 1988; Livingstone and Lunt 1992; Sullivan et al. 1989).
Some of this literature
is more concerned
with credit than with
debt. Though the distinction is fuzzy, by credit we usually imply an
arrangement
to borrow money over some more or less defined period,
with an assumption that repayment is within the borrowers means at
all times. House mortgages
and hire-purchase
or instalment
credit
schemes fall in this category, at least at the point when they are
arranged. In contrast, debt implies an obligation that the borrower is
either unable to discharge or is trying to avoid discharging, at least at
the time when it should be discharged. Thus credit implies a willing
lender (often, indeed, the loan is made on the lenders initiative) while
debt implies an unwilling lender. The early work at the Michigan
Survey Research
Center (summarized
by Katona 1975: chapter 171
was mainly concerned
with credit, in this sense, rather than debt.
Ranyards (1988) theoretical
analysis in terms of mental accounts is in
the same area, and Livingstone
and Lunt (1992), Berthoud
and
Kempson (1990) and Ford (1988) provide some of the empirical data
base on which a modern theoretical
analysis can build.
Most of the rest of the literature deals with the opposite end of the
continuum,
that is, with crisis debt. People who owe money that they
ought to repay, and cannot repay it at the moment when they ought,
may still be a long way short of being in a debt crisis. They may be
justifiably confident
that the debt can and will be discharged
next
payday; or they may just be putting off a payment that they could
afford to make, in order to retain liquidity or even to maximize
interest earned. Crisis debt arises when there is no prospect of paying
off or even reducing accumulated
debts, which are often increasing
steadily. Its logical result is bankruptcy,
which was indeed devised to
limit the damage that individuals in debt crisis could suffer (Sullivan
et al. 1989). Sullivan et al. and Corkish (in preparation)
are dealing
specifically with the causes of unmanageable
debt, and Lehnert (1977)
with its psychological consequences.
The larger surveys (e.g. Berthoud
and Kempson 1990; Ford 1988) of normal credit use also include some
data on problem debt. Cameron and Golby (in press), in a study of

S.E.G. Lea et al. / Economic psychology of consumer debt

87

users of a debt counselling service, were able to look both at the

causes and consequences of unmanageable debt.
From these studies, a picture is beginning to emerge. Almost
everybody in modern western societies uses credit to some extent. In
Britain, almost three-quarters of households had at least one credit
agreement during 1989 (Berthoud and Kempson 1990). There are
sharp national differences in credit use (Katona 1975: 282-283), and
they would bear further investigation, but in any modern economy, it
is almost impossible to avoid having either a house mortgage, a credit
tariff for utilities, or a credit card. But people vary considerably in
how acceptable they find even these agreed credit arrangements. They
vary even more in how far and how often they make the transition
from credit to debt or from debt to unmanageable debt.
The variables that are correlated with these transitions are not
altogether clear. Some studies show clearly that debt in general, and
unmanageable debt in particular, are problems of poverty. Sullivan et
al. (1989) argue, from their study of court records, that people who go
bankrupt are in the main ordinary Americans; they just happen to
have lower incomes or larger expenses (with the same type of job and
family situation) than the average, and fail to cope. Other studies
show that borrowing increases with income and/or wealth (e.g. Katona 1975; Livingstone and Lunt 1992), and that those with the biggest
unmanageable debts have or had the highest incomes (e.g. Cameron
and Golby in press). Many authors have argued that there is an
increasing public acceptance of both credit and debt, leading to a
culture of indebtedness which has dangerous social and economic
implications (e.g. Leigh-Pemberton 1989). Those who have carried out
empirical research, however, have generally argued that their results
do not support this position (e.g. Sullivan et al. 1989). On the other
hand, attitudes and other psychological variables do correlate with
individual differences in credit use (Katona 1975; Livingstone and
Lunt 19921, and Lehnert (1977) provides interesting psychological
interpretations of a number of case histories of bankruptcy.
One of the difficulties in interpreting the literature is that most
studies deal with either agreed credit or with unmanageable debt; the
intermediate category of non-agreed but manageable debt has been
very little investigated. There is a practical reason why this is so.
Because most people borrow in some form, credit use can be studied
through population surveys; at the other extreme, samples of crisis

88

S.E.G. Lea et al. / Economic

psychology of consumer debt

debtors can be found through court records (e.g. Sullivan et al. 1989)
or advice services (e.g. Cameron and Golby in press). Debt is both less
frequent and less visible. It is also quite likely not to be acknowledged.
Like many other behaviours which are either illegal or not fully
socially acceptable, it is difficult to research by conventional surveys
(Robins 1963). 0 ne of the few studies to have looked at this kind of
ordinary debt is a study by Lunt and Livingstone (1991), and,
significantly, this looks at the explanations people give of other
peoples debts, not at individuals own experience of debt.
The present study looks at both crisis debt and at the more elusive
category of non-crisis (but non-agreed) debt. It took advantage of an
offer of co-operation from a major regional utility company, Welsh
Water plc. The company is the monopoly supplier of water and
sewerage services to approximately 1 million households in Wales
(and in part of one neighbouring English county). They were thus able
to supply us with random samples of up-to-date names and addresses
of householders.
Far more important, they were able to classify
customers according to their credit status with the company, from
those with no water debt to those with major debt problems. This
meant that (with appropriate measures to ensure confidentiality), we
could mail to relatively large numbers of people who were known to
be in debt to different degrees; and we could test the truthfulness of
peoples answers in a sensitive financial area.
The general aim of the study was thus to expand our knowledge of
the natural history of debt. From the previous literature, it was clear
that we could expect a large number of variables, some economic,
some sociological, and some psychological, to be correlated with debt.
An important question, however, is how far they make independent
contributions. The data of Livingstone and Lunt (1992) suggest that
the contributions of attitudes and economic variables are largely
independent, but they dealt largely with credit rather than debt, and
their measures of credit/debt depended on self-report. We wanted to
see whether their results would be reproduced with a sample of
including more people in more serious financial difficulties, and using
objective measures of indebtedness. We classified the variables we
considered as follows:
- Economic resources: Income, employment status, home ownership;
- Economic need: Household size and constitution;

S.E.G. Lea et al. / Economic psychology of consumer debt

89

Social factors: Behaviour and attitudes of people known to the

respondents;
- Attitude-forming variables: Age and religion;
- Attitudes (measured by a conventional psychological scale).

These classes of variables form a rough hierarchy from the economic to the psychological. From an economists point of view, even
the most economic of them are fairly soft, since they were obtained
by self-report, while from the psychological point of view even the
most psychological of them are fairly superficial. However, since
debt is an economic behaviour, the simplest and in a sense the most
conservative hypothesis is that it will have economic causes, and any
correlation with other variables will arise only as a result of mutual
dependence. We therefore wished to test whether each successive
class of variables had any independent effect after the previous class
had been taken into account.
Method
Sample

The aim in sampling was to send questionnaires to 100 households

in each of three credit status categories, in each of nine county areas
(the eight administrative counties of Wales plus part of the county of
Hereford and Worcester in England, which lies within the Welsh
Water area). The three credit status groups were:
- Non-debtors: those with no outstanding debt to the company;
- Mild debtors: those to whom a final demand (a second request for
payment following the normal bill) had been sent, and no payment
yet received, but no further action had yet been thought necessary;
- Serious debtors: those against whom court proceedings for recovery
of debt had been initiated.
The sampling procedure was as follows. Samples of about 150 were
drawn at random by Welsh Water staff from the names and addresses
of their customers within each county/credit
category combination.
Envelope labels for these customers were printed by Welsh Water and
supplied to us. The county areas were obvious from the addresses; to
protect confidentiality, the credit categories were identified only by

90

S.E.G. Lea et al. / Economic

psychology of consumer debt

codes. We selected
100 labels for each code/county
combination,
largely at random but rejecting (i) addresses outside the county area,
presumably
those of absentee landlords, and (ii) any where the address was printed in an eccentric form which might have identified
Welsh Water as the source of the labels, since we were anxious to
avoid biasing the answers to questions about debts to public utilities.
Different coloured questionnaires
were sent to addresses bearing each
code. For one code/county
combination,
only 40 labels were provided. In all, therefore,
2640 questionnaires
were mailed out. This
represents
about 0.25% of the households
in the Welsh Water area.
After all questionnaires
had been mailed out, surplus labels were
shredded, and Welsh Water then informed us which credit categories
corresponded
to each code. As an added measure to ensure confidentiality, none of those handling the questionnaires
had any substantial
current connection with Wales, and in fact none of us recognised any
of the names or addresses used.

Questionnaire
The questionnaire
consisted of a 4-page A4 leaflet. It contained:
(a) A question about the respondents
current financial position, to
be answered on a 5-point rating scale, followed by questions about
current debts to ten likely creditors,
to be answered on a 4-point
rating scale from None to Over &500; to allow a check on the
sampling procedure,
debt to The water company was included in this
list. The ten creditors
are shown in Figure lb. Note that moneylender, one of the creditors used, in everyday British English implies
a specialist (and often not very respectable)
trader, not a bank or
other general financial business.
(b) Questions about how urgent it would be to repay a debt to the
same ten creditors, and what the respondent
had in fact done when
last asked for repayment by them; plus three questions which between
them gave the respondents
order of priority for repayment to the four
public utilities (gas, electricity, water and telephone).
(cl Questions about whether other people had told the respondent
they were in debt, about the reaction they would expect from others
who knew the respondent
was in debt, and about people or organizations they had spoken to about any current debt.
(d) Twelve questions
exploring
attitudes
to debt, spending and
saving in general, intended to serve as a pilot towards the develop-

S.E.G. Lea et al. / Economic psychology of consumer debt

91

ment of a full debt attitudes questionnaire. These questions are listed

in Table 1. They were to be answered on a l- to I-/-point scale from
Very strongly agree to Very strongly disagree.
(e) A page of questions about the social, demographic, occupational
and economic status of the respondent and his or her household.
All questions were asked in as colloquial a style as possible.
Procedure

The questionnaires were distributed along with a letter which

invited the recipient to participate, explained the purposes of the
research, and gave assurances about confidentiality. Recipients were
invited to write to the researchers if they wanted information about
the results of the research. To avoid biasing the answers, the letter
made no mention either of the support being given by Welsh Water,
or of the selection of recipients by credit categories. A Freepost
(reply-paid) envelope was enclosed for the return of the questionnaire. The county area to which the questionnaire had been sent was
written on the outside of this envelope. Although a minority of the
Welsh population have Welsh as their first language, all materials
were distributed in English only.
The selection of recipients was made in February 1991, and questionnaires were mailed in early March 1991. When the questionnaires
were returned, they were datestamped and numbered, and the county
area from which they came was written on them. The replies to
questions about occupation were coded, using the Hall-Jones scale of
occupational prestige (see Oppenheim 19661, to give social class
categories. Data analysis was carried out using the SPSS, Minitab
and LIMDEP packages. Although most of the variables were essentially ordinal, all data were first examined, and their statistical significance was tested, using categorical procedures, in case there were any
non-monotonic relationships.

Results
Return rates

The number of usable questionnaires returned was 420, of which

203, 127 and 90 came from the Non-debtor, Mild debtor and Serious

92

5.E.G. Lea et al. / Economic psychology

of consumer

debt

debtor categories respectively. After allowing for questionnaires returned as undeliverable by the post office, the return rate was 16%
overall, and 23%, 14% and 11% in each credit category. There were
no substantial differences in return rate between county areas. Adjusting for the fact that the two debt groups are minorities within the
population, these return rates would correspond to an approximately
21% return from a random sample of households. The proportion of
male respondents was 56%. Four respondents wrote separately, requesting information about the results of the research. One telephoned to complain about being contacted; one returned a defaced
questionnaire, and ten returned completely blank forms, presumably
also a form of protest.
Many questionnaires lacked answers to some questions. In the
analyses that follow, all available data for each question have been
used, even if the questionnaire was incomplete in other respects.
There was no obvious multimodality in the distribution of return
lags. Accordingly, those questionnaires that were returned after more
than 11 days were classified as late, and used as a model for
non-returns (cf. Oppenheim 1966). They constituted 38% of the total
usable returns, including 37% of the Non-debtor group, 43% of the
Mild debtors, and 33% of the Serious debtors.
Manipulation checks

Figure la shows how respondents described their financial position.

Non-debtors showed a symmetrical distribution across the response
categories while Mild and Serious debtors showed increasing skew
towards the Very difficult.
Figure lb shows the responses to the questions about current debts.
The leftmost bars show reports of debts to The water company,
which was used as a check on the sampling procedure and the
respondents truthfulness. In the Non-debtor category, only 10%
reported that they owed money to the water company; this figure rose
to 32% for the Mild debt group and 72% for the Serious debtors, The
answers to the questions about debts to other creditors showed
striking correlations. In the Non-debtor group, 66% claimed to owe
nothing to any of the nine listed creditors, other than the water
company (note that the questionnaire indicated explicitly that we were
only calling a mortgage a debt if payments were overdue). The

93

S.E.G. Lea et al. / Economic psychology of consumer debt

Subjective

financial

position

50%

40%

30%

20%

10%

0%

Very

Just

difficult

coping

Could

Subjective
m

No debt

financial

@8

Mild debt

Self-reported
and credit
m
% with debts

Fig.

1. Validation

No debt

About

be better

@88 Mild debt

right

Very

healthy

position
a

Serious

debt

debt
group
a

Serious

debt

to

of the credit groups manipulation:

credit
financial situation and (b) self-reported

group related
debt.

to subjective

(a)

94

S.E.G. Lea et al. / Economic psychology

of consumer

debt

corresponding
figures for Mild and Serious debtors were 36%
16%. The creditors
to whom most respondents
were in debt
credit card companies (37% acknowledging
some debt, 11% for
X500); fewest acknowledged
debt to a close friend (5%, 1% for
fSOO>.

and
were
over
over

Repayment
Figures 2 and 3 show responses to questions about how urgent it
would be to repay a debt to ten possible creditors. Here there are
rather few differences
between credit groups. We also asked what
people had done on the last few occasions when they were asked to
repay money by the same ten creditors. For the water company, the
modal responses of the Non-debtor
group was I paid up immediately
(43%), while for the debtors it was I waited for the final demand
(Mild debtors, 54%; Serious debtors 66%). Scoring I paid up immediately as 4 and I didnt repay it as 1, the mean immediacy ratings for
repaying the other nine creditors were 3.0, 2.7 and 2.4.
Figure 4 shows the rankings of the urgency of repaying the four
public utilities in the three credit rating groups. These rankings
showed fair consistency (Kendalls W coefficient of concordance
= 0.32
for the sample as a whole, and 0.32, 0.36 and 0.27 for Non-debtor,
Mild debt and Serious debt groups). For all three credit status groups,
most urgency was attached to repaying an overdue electricity bill, and
least to a telephone
bill; gas and water bills were intermediate,
with
slightly more urgency attached to the gas bill.
First order differences between credit rating groups
Unless there is a specific comment
to the contrary,
all group
differences
described here reached at least the 0.05 significance level,
using chi-squared
tests. The differences
meeting this criterion
are
listed in Table 2, which also reports the actual significance
levels
reached.
Economic resources
We have already reported the differences
the subjective financial strain they reported.

between credit groups in

Figure 5 shows that more

95

S.E.G. Lea et al. / Economic psychology of consumer debt

Urgency

of

Welsh

repaying

different

creditors

Electricity

Water

Urgency
I

No debt

!Tm

British

Mortgage

or rent

(1)

board

Ol repayment
Mdd

debt

srnova

dab,

Telecom

TV rental

707.,

Fig. 2. Distributions

of reported urgencies
(1): Utilities,

of repaying creditors in the three credit

housing, and TV rental.

rating

groups

specific measures of economic resources showed similar trends. Family income was asked for directly on the questionnaire (in the broad
categories used in the figure); both debt groups reported lower income than the Non-debtors. Occupational status was deduced from

S.E.G. Lea et al. / Economic psychology of consumer debt

96

LJrgency

of

Welsh

repaying

Fig. 3. Urgencies

creditors

(2)

Water

Fami1.y

Credit

different

card

Close

Money

friend

lender

of reported urgencies of repaying creditors in the three credit rating

Family, friends, credit cards and moneylenders.

groups

(2):

questions about the occupation (or past occupation) of members of

the household. Wherever possible, respondents were classified even if
not currently economically active, and those who could not be classified were dropped from the present analysis. Although distributions of

S.E.G. Lea et al. / Economic psychology of consumer debt

Priorities
Electricity

Fig. 4. Distributions

for

repayment
British

board

of priorities

97

for repayment
of a hypothetical
three credit-rating
groups.

Gas

debt to four utilities

in the

socioeconomic class for all three credit categories were bimodal, both
debtor groups clearly tended to lower occupational classes than the
Non-debtors.
Housing conditions also showed marked variation (Figure 6a). The
three main categories represented were outright ownership, ownership through a mortgage, and renting from the council (private renting
is probably underrepresented
in the sample since in many cases
landlords would be responsible for water charges). Among the Nondebtors, the modal category was outright ownership (50%), among
Mild debtors it was ownership via mortgage (53%), while among
Serious debtors it was council tenancy.
Economic need

The questionnaire items that were intended to reflect economic

need asked about the marital status of the respondent, and the
number of adults and the number of children present in the household. There were no significant relations between credit category and

S.E.G. Lea et al. / Economic psychology of consumer debt

98

family

Annual

income

and

credit

group

30%

20%

10%

0%

under

L5000-L10000

L5000

L10000-Ll5000

Annual
m

No debt

Socio-economic

&8

over

L15000-L20000

family

L20000

income

Mild debt

class

Serious

and

debt

credit

group

30%

25%

20%

15%

10%

5%

0%

Fig. 5. Economic

No debt

resources:

distributions

k88$ Mild

debt

of reported
groups.

income

Serious

debt

and occupational

class in the credit

S. E. G. Lea et al. / Economic psychology of consumer debt

Housing

type

and

credit

99

group

60%

50%

40%

30%

20%

10%

0%

Owned

outright

Mortgage

Private

rent

Housing
m

No debt

Children

Council

Family/friends

type

Mild debt

in household

rent

Serious

debt

and credit

group

60%

40%

20%

0%

None

m
Fig. 6. Economic

m
Number

of

No debt

3 or more

children
Mild debt

in

household
/

Serious

debt

resources
and economic
needs: distributions
of (a) housing
numbers of children in household in each credit group.

status

and (b)

100

S.E.G. Lea et al. / Economic psychology of consumer debt

either marital status or the number of adults, though the two debtor
groups were somewhat less likely to be either married or living with a
partner, and more likely to be in households with one or three or
more adults rather than two. However, there were marked differences
in relation to the numbers of children in the household (Figure 6b).
The mode for all groups was none, but childless households accounted
for 75% of the Non-debtor group, 54% of the Mild debtors, and only
32% of the Serious debtor group, while those with 3 or more children
accounted for l%, 11% and 19% of the three groups respectively.
Although the number of adults in the household did not have a
significant effect as such, a variable constructed from it did. We coded
the 35 respondents who reported one adult and at least one child in
the household as single parents. They formed 5% of the Non-debtors,
6% of the Mild debtors, and 19% of the Serious debt group.
Social support for debt

Questions addressing this factor asked about the attitudes of other

people known to the respondent towards debt, either their own or the
respondents. We asked, Have any of your family, friends or relations
told you they are in debt ? Responses are summarized in Figure 7a.
Most of the Non-debtor group (53%) responded None; for the Mild
debtors the modal response was a few, and for the Serious debtors, it
was nearly all. We also asked how respondents thought their friends
and relations would react if the respondent told them that he or she
owed El00 or more to a public utility company. Responses to this
question are summarized in Figure 7b. The modal response from
Non-debtors was They would think it odd and not understand, while
from Mild and Serious debtors it was They would understand but
think it unwise. The proportions giving the response They would
think it normal were much higher for the Serious debt group than for
the other two. As regards consulting other people or agencies about
debt, the one most often consulted was a member of your family
(18% of all respondents, including 28% of the Serious debt group).
The local council were consulted by fewest people (6% of all respondents and 13% of the Serious debt group.
Attitude-forming variables

We considered the following variables that might have been expected to contribute to the respondents attitude towards debt: gen-

S.E.G. Lea et al. / Economic psychology of consumer debt

Other

people

Are other

people

you

and

debt

know

in debt?

101

60%

50%

40%

30%

20%

10%

0%

Nearly all

Several

People

Others

you

know

attitudes

of LlOO for

who are in debt

if you

electricity,

had

water

debts

or gas

60%

50%
40%
30%
20%
10%
n4.
rhaapprore

Not

understand

Attitude
m

No debt

nderatand

but...

nmlc

it

norms,

of friends/family
Mild debt

Serious

debt

Fig. 7. Social support for debt in the three credit groups: distributions
of (a) numbers of other
people, known to the respondents
to be in debt and (b) expected attitudes of others if they knew
the respondent
was in debt.

der, age, and religious affiliation. In addition, of course, the variables

we have considered
as antecedents
of debt may in fact have their
effect by way of changes in attitudes. Gender had no significant effect,

102

S.E.G. Lea et al. / Economic psychology of consumer debt

but there were significant effects of age and reported religious affiliation (Figure 8). Although the Age effect is not completely straightforward, both debt groups were substantially younger than the Non-debtors. In all credit categories, the modal religious affiliation claimed
was Anglican, but in the Non-debtor
group, there were elevated
proportions
of Non-conformists
and Agnostics/Atheists.
Numbers of
Roman Catholic and Other responses were correspondingly
higher in
the debtor groups. Only one respondent
claimed to be Moslem and
none to be Hindu, suggesting that there was a low rate of return from
ethnic minority communities.
Attitudes to debt
Using the total sample, Cronbachs
(Y for the 12-item scale was
found to be 0.70, indicating an acceptable degree of scale homogeneity. Table 1 shows that all but two items (Big companies
can look
after themselves and A credit card is a ticket to careless spending)
had at least moderate
correlations
with the total of the remainder.
Although the (Y value could have been improved marginally by dropping these two items, in the interests of retaining a broad approach to
debt attitudes (and because a full psychometric
investigation is planned
for later in the research programme),
all items were retained. Since
the overall sample is not population-representative,
being overweighted with debtors, the reliability analysis was rerun on the Nondebtor group alone; the results were essentially unchanged.
Principal
components
analysis of the responses to the 12 items produced only
three components
with eigenvalues
greater than 1 (3.13, 1.91 and
1.06). The first component
could be identified as an approval of debt
measure, with all items loading appropriately
on it; no interpretation
of the other two major components
was possible. It was therefore
judged appropriate
to use the 12 items as a scale of attitudes towards
debt. Figure 9 shows the mean scale scores for the three respondent
groups, scoring Very strongly agree as 1 and Very strongly disagree
as 7. Clearly all groups tend to disagree with pro-debt statements, but
disagreement
is weaker in the debt groups.
Multivariate analysis
Dependent variables
We attempted
to predict four measures of indebtedness:
the credit
rating group; whether or not the respondent
reported any debt; and

S. E. G. Lea et al. / Economic psychology of consumer

and

Age

credit

103

debt

group

35%,

20%
15%

10%
5%
0%
under

25

25-34

Age

No debt

Religious

65-74

55-64

75 and

over

group

Mild debt

affiliation

Serious

debt

and credit

group

60%

50%

40%

30%

20%

10%

0%

Roman

Catholic

Anglican

Non-conformistAgnostic/Atheist

Religious
m
Fig. 8. Attitude-forming

No debt
variables:

m
distributions

Other

affiliation

Mild debt

Serious

of age and religious

groups.

debt

affiliation

in the three credit

104

S.E.G. Lea et al. / Economic psychology of consumer debt

Table 1
Items used in the debt attitudes

scale, together

with scoring

key and item-total

correlations.

Item

Scoring

Item-total
correlation

a if item
deleted

Most people buy too much on credit

I am careless with money
It is better to save before rather than
after buying expensive things
I do not like being in debt
If youve got money you might as well spend it
I find it hard to keep track of my money
Debts should be repaid as soon as possible
Big companies can look after themselves
A credit card is a ticket to careless spending
I put money aside on a regular basis for the future
It is OK to be in debt as long as you pay off
the debt in the end
It is important to live within ones means

+
_

0.29
0.40

0.69
0.67

+
+
_
-

0.51
0.26
0.43
0.30
0.48
0.07
0.17
0.45

0.66
0.69
0.67
0.69
0.67
0.72
0.71
0.66

0.35
0.45

0.68
0.67

+
_
+
+
_
+

for those who did report some debt, two measures of its severity,
scored as follows. The first measure emphasised the breadth of
indebtedness, by scoring each creditor from 1 (no reported debt) to 4
(debts of over &SO0reported), and totalling these scores across the 10
creditors. The second measure emphasised the depth of indebtedness,
by replacing these ordinal scores by midpoints of the answer categories (0, f50, &300 and flOO0 respectively) before summing. The two
measures are referred to below as the breadth and depth measures
of self-reported debt. Because many respondents failed to answer one
or two questions, the effective sample sizes for the analysis of creditrating group is reduced to 332; it was substantially lower for the
self-reported debt analysis, with only 253 usable responses. Of these,
143 reported some debt, so this was the sample size for the third
analysis. Prediction of credit-rating group was carried out by ordered
logit analysis, prediction of the presence or absence of self-reported
debt by logit analysis, and prediction of level of self-reported debt by
multiple regression.
The ten potential creditors listed on the questionnaire were a
somewhat heterogeneous group, so the responses to these items of
those respondents acknowledging some debt were subjected to reliability and principal components analysis, before and after converting

SE. G. Lea et al. / Economic psychology of consumer debt

Attitudes
1 =strongly
Agreement

toward

disagree,

with pro-debt

,
No debt

Fig. 9. Attitudes

debt

7=strongly

agree

statements

Mild debt

Credit

105

group

towards debt: mean scores for agreement

12-item scale.

I
/

Serious

debt

with a pro-debt

attitude on the

ordinal scores to range midpoints. Reliabilities were unimpressive

(Cronbach cy values of 0.45 for both measures). However, in both
cases there was a strong first principal component which loaded
positively on all items but one item (eigenvalues 2.84 and 2.31 for the
two measures; the anomalous items were debts on credit cards for the
breadth measure and on TV rental for the depth measure>. No
subsequent component suggested an interpretable grouping of creditors for either measure.
Independent

variables

Only the predictor variables listed in Table 2, which had been

shown to have a significant first-order effect, were included in the

106

S. E. G. Lea et al. / Economic psychology

Table 2
Summary of differences
between
least the 0.05 level are shown.

the three creditor

of consumer debt

categories.

Only differences

significant

Variable

Tendency
groups

Income
Socioeconomic
status
Household
financial
position
Housing

Lower
Lower status

18.02
33.53

8
14

More difficult

100.14

0.00005

More council
tenants, fewer
own houses
outright
More

95.56

0.00005

66.20

0.00005

More
More

16.75
68.74

2
6

0.0005
0.00005

Less disapproving

49.24

0.00005

Younger
Fewer nonconformists,
atheists and
agnostics
Less unfavourable

65.80
23.14

12
8

0.00005
0.01

More, have at least

one

62.40

Children in
household
Single parents
Number of
friends/family
who are in debt
Attitude of
friends/family
to respondents
debt
Age
Religious
affiliation

Attitudes towards
debt
Debts to other
creditors

of debtor

x2

14.93

at at

(Y

df

2,377
2

0.05
0.01

0.0005
0.00005

multivariate
analyses. In some cases categories
were combined
because group sizes would otherwise have been too small. The final list
of variables used is given in Table 4. They include 7 ordinal or
dichotomous
variables, and three variables (housing status, age, and
religious affiliation),
represented
by 3, 4 and 2 dummy variables
respectively,
making a total of 16 regressors.
It is to be expected that data from a study of the present sort will
show intercorrelation
of the independent
variables.
It is therefore
important to test whether there is sufficient multicollinearity
between

S.E.G. Lea et al. / Economic psychology of consumer debt

107

the variables to invalidate the results. The 15 variables listed in Table

4 were therefore submitted to principal components analysis. The
analysis yielded only 6 factors with eigenvalues greater than 1.0,
implying some degree of redundancy between the variables. However,
when each of the variables in turn was regressed against all the others,
the maximum value of R*-adjusted obtained was 66%, implying that
none of the variables is unduly dependent on the remainder.
Hierarchical analyses

For each dependent variable, a hierarchical analysis was used,

which investigated a series of groups of variables in turn. The variables were entered into the analysis in the groups listed in the
introduction and used in the presentation of first-order effects (Economic Resources, Economic Need, Social Support for debt, Attitudeforming variables, and Attitudes), in that order. This analysis assesses
the influence and statistical significance of each group given that all
previous groups have already been taken into account. Table 3 gives
the results. For each analysis, the significance of the improvement of
prediction made by adding each group of variables can be tested,
approximately, by using a chi-squared test based on the resulting
increase in log likelihood ratio for the logit models and the usual F
test for the multiple regression analyses. The table shows that adding
each successive group of predictor variables had a significant effect on
both measures of the presence of debt, but the attitude-forming
variables did not significantly improve the prediction of either measure of the extent of self-reported debt, and the economic need
variables made no significant improvement to the depth measure.
Note that despite these statistically significant trends, the increases in
predictive success on adding more variables are small, especially for
credit-rating group. In some cases adding more variables even reduces
the numerical success in prediction, though the significant results of
the log-likelihood ratio test mean that the evidence in favour of
misclassifications, or against correct classifications, must have been
reduced. If the aim is to predict membership of these actual categories, rather than using them as indices of indebtedness, the most
successful model would include fewer variables; the most effective
model uses as predictors only income, renting (or living with friends

S. E. G. Lea et al. / Economic psychology of consumer debt

108

Table 3
Results of multivariate
analyses: (a) Hierarchical
analysis. Each row shows the effect of adding a
group of variables
to the predictor
set while retaining
all those given above. Entries under
success give the proportion
of individuals correctly categorized
after adding the new group of
variables for the first two analyses, and the R*-adjusted
value for the third. x2 and F statistics
test the significance of the improvement
in predictiveness
produced by adding them.
Predictor group
(with increment
and residual (df)

Credit-rating

Self-reported
debt

Success

Success

x2

Extent of debt reported

x2

Breadth
measure
Success
CR*-adj.)

Depth
measure
F

Success
(R2-adj.)

Economic

resources

58%

92.12 71%

45.56

8%

4.09 =

9%

4.64 b

(4,139)
Economic

need

60%

15.30 c 71%

6.13 a

9%

1.75

9%

0.53

(2,137)
Social support
debt

for
61%

10.29

74%

33.30 c 20%

(2,135)
Attitude forming
variables

60%

12.47

77%

17.81 b 23%

(6,129)
Attitudes

59%

6.56 a 79%

6.15 a 28%

10.48 c 15%

1.96

18%

8.54 b 21%

6.30 b

1.83
6.15 a

(1,128)
a p < 0.05;

h p < 0.01;

= p < 0.001.

etc.) as against owner-occupancy, number of children in household

and a simple age breakdown into those above and below age 55. This
reduced model successfully categorizes 63% of the respondents. The
models reported in Table 3, however, would be expected to be better
predictors across a full range of levels of indebtedness.
Simultaneous analysis

To locate these effects more precisely, we looked at the situation

after all the variables had been entered simultaneously, so as to assess
the influence and significance of each predictor in the presence of all
others. Table 4 shows the results. The entries are regression coefficients, that is to say, they show the effect on the dependent variable of
a unit change in the predictor. Because both the predictors and the

109

S.E. G. Lea et al. / Economic psychology of consumer debt

Table 4
Results of the multivariate
analyses: (b) Overall analysis. Entries in the main body of the table
are regression
coefficients
for each predictors
independent
contribution
to the dependent
variable.
Positive coefficients
indicate an increasing
tendency
to indebtedness
for increasing
values of the predictor.
Dependent

Predictor

Credit
rating of

grow
Economic resources
Family income
Occupational
class
Housing (difference from mortgage)
Owned outright
Rented or living with family or
friends
Economic need
Children in household
Single parent
Social support for debt
Number of family or friends in debt
Attitudes of others to respondents
debt
Attitude forming variables
Age (differences
from 35-44):
under 25
25-34
45-54
55 and over
Religion (differences
from
Anglican):
Roman Catholic or other
Non-conformist,
agnostic or atheist
Attitudes

a p < 0.05;

Extent of selfreported debt

Breadth
measure

cp

< 0.001.

-65
-11

- 0.532 a
- 0.456

- 0.735 a

- 0.225

- 0.532

- 395

0.987 b

0.509

- 1.532 =

-460

0.430 c
- 0.241

0.153
1.507

0.284
0.496

0.270 =

0.714 b

1.119 =

0.093

0.462 a

0.081

1.137
0.272
0.818 a
- 0.027

16.030
1.564 b
- 0.030
- 0.244

1.774
0.530
- 1.358
- 0.463

754 =
219
- 280
-43

0.428
- 0.281

0.099
- 0.034

0.039
- 0.681

- 146
-34

0.649 a
253
108.94

1.133 b
143
27.5%
4.62

df)

Depth
measure

-0.152
- 0.040

332
137.17 =

b p < 0.01;

Existence
selfreported
l-l.+
F;L

- 0.281 a
0.007

0.477 =

Cases included (N)

Overall x2 (14 df)
Overall Rz-adj.
Overall F (14, N-15

variable

63
7

250 b
-53

267 a
143
21.3%
3.39 =

110

S.E.G. Lea et al. / Economic psychology of consumer debt

dependent
variables are on differing scales, numerical comparisons
of
these coefficients
either across the rows or down the columns of the
table are not always meaningful.
However,
both the signs of the
coefficients
and comparisons
of ratios of coefficients
do have a direct
interpretation.
It can be seen that not all the variables in the groups
had significant effects on all dependent
variables, and some had no
significant effect on any variable. In the Economic Resource group,
occupational
class had no significant effect on any variable (indicating
that the effect seen in Figure 5b can be explained by the correlation of
class with such variables as income and housing status). In the Social
Support group, the number of other people respondents
knew who
were in debt had an independent
effect on all dependent
variables,
but respondents
estimates of others attitudes to their (the respondents) debt had no significant effects. In the Attitude-forming
variables group, Age showed some independent
effects but religious
affiliation did not. The only anomaly, relative to the first order effects
shown in the figures, occurs in the Economic Resources group, where
both measures of the extent of debt show a negative effect of renting
rather than owning a house on a mortgage.
The relative effectiveness
of the predictors (indicated by the significant levels they reach) were slightly different for the different dependent variables. For credit-rating
group, the variables that emerged as
having the largest independent
effect were the number of children in
the household and the housing variables. For the existence of self-reported debt, the number of family and friends in debt and age group
(with young respondents
being most likely to report debt) were most
important. For the extent of self-reported
debt, number of family and
friends in debt and (especially) attitudes were most significant. Table
4 also shows some interesting reversals. House renters are significantly
more likely to be in one of the debt groups, and (non-significantly)
more likely to self-report
debts, but if they do report debts, the
amount is significantly less than for mortgage holders. Those in the
45-54 age group are significantly more likely to be in the debt groups,
but (non-significantly)
less likely to self-report
debt, and if they do
report any, report less than the modal (35-44) age group.
As a check on the possible distortions introduced
by non-returns,
the factor of late return was introduced
into all four multivariate
analyses after obtaining the results reported
in Table 4. It had no
significant effect on any dependent
variable, and the general pattern

S.E. G. Lea et al. / Economic psychology of consumer debt

Table 5
Use made of sources

of help by respondents

in the Serious

111

debt group.

Source of help

Percentage
of the group
reporting using source

Person/institution
to which money is owed
Friend
Family
Bank or building society manager
Unemployment/Social
security office
Citizens Advice Bureau
Local council
Other

33%
32%
28%
26%
16%
14%
13%
3%

of regression coefficients was unchanged. The only substantial change

was that, with late return taken into account, the perceived attitudes
of others to the respondents debt showed a significant independent
effect on the presence of self-reported debt, whereas income and
housing variables did not.
Further analysis of the Serious debt group

Further analyses were carried out on the group of Serious debtors.

Table 5 lists the proportion of the group who reported using each of
the helping agencies we enquired about. It can be seen that most of
them are used a considerable extent, and no one of them is dominant.
Most of the Serious debt group reported seeking help from at least
one of the agencies listed in Table 5; only 19% did not use any of
them. This small group differed from the rest of the Serious debt
group in a number of ways. Differences that were found to be
statistically significant are listed in Table 6. A minority (28%) of
respondents in the Serious debt group reported that they did not have
any debt to the water company. Their answers to the remaining
questions on the questionnaire were compared with those of the rest
of the Serious debt group, and a number of significant differences
were found. These are also listed in Table 6. The differences on both
these factors are almost all in the direction of the minority group (non
seekers of help, or those not reporting debt to the water company)
being more like Non-debtors or Mild debtors than the rest of the

112

S.E. G. Lea et al. / Economic psychology of consumer debt

Serious debt group. The only exception is that those not reporting
debt claim that their family or friends would be less disapproving of
their (the respondents) debt if they knew of it.
Discussion
Representativeness of the sample

The response rate was disappointing. However, the estimated figure

for a corresponding random population sample, 21%, is not unreasonable given that the subject of the questionnaire was a potentially
sensitive one. The lower figures for the two debtor groups were to be
expected, given that the subject was not just potentially but actually
sensitive for them, and for the Serious debtors at least, they were
individuals who were facing fairly serious difficulties. It is unlikely that
filling in questionnaires would be high in their priorities. The multivariate analysis indicates that, with other variables taken into account,
there is no significant or substantial difference between early and late
returned questionnaires,
despite a marked tendency for the debt
groups, especially the Mild debt group, to be late returners. This
makes it less likely that non-return will have affected the pattern of
results (Oppenheim 1966).
As a sample of the population as a whole, water customers will
show some inevitable deviations. Private tenants, people in lodgings or
living with family or friends, the young and the old, are likely to be
seriously underrepresented.
Furthermore, water bills are addressed to
one person in a household, and given traditional gender roles this is
most likely to be the husband or father. In spite of these difficulties,
the respondents seem to constitute a very reasonably representative
sample. The gender distribution is surprisingly near equality; the
overall age profile is close to the population form except at the
extremes; and the income and social status profiles are also close to
population values. Except for the near absence of private tenants, the
same could be said of the housing profile.
The credit groups manipulation

Two lines of evidence show that the sampling procedure was

successful in identifying groups who were not in debt, mildly in debt,

113

S.E.G. Lea et al. / Economic psychology of consumer debt

and seriously in debt. First, when asked directly about debt to the
water company, almost none of the Non-debtor group, a third of the
Mild debt group, and a substantial majority of the Serious debt
groups, acknowledged some debt. Bearing in mind the lag between
selection of addresses and return of questionnaires, the anomalies are
not a major cause for concern, though they may indicate some
tendency to self presentation. Second, on every measure that could
reflect financial strain, the three groups differed in the expected way.
There was, indeed, nothing at all special about water charge debt.
Respondents whom we knew to owe money to the water company also
Table 6
Significant
any form
company.
then there

differences within the Serious debt group according as to whether or not they sought
of help, and whether
or not they reported
that they had any debt to the water
Note that if there is no entry in the X2 column for one of the two partitions
group,
was no significant difference for that grouping for the variable concerned.

Variable

Subjective financial
position
Overdue payments on
mortgage or rent
Debt to water company
Debt to electricity
board
Debt to British Gas
Debt to British
Telecom
Action on last credit
card debt
Number of family
friends in debt
Reactions of
friends/family
to
respondents
debt
Help sought from
local council
Marital status
Housing

status

Income
a p < 0.05;

bp < 0.01.

Responses of non-help
users and/or nonacknowledgers
of
debt:

X2

(df)

For help use

For selfreport of
water debt

Less difficult

11.98 b (3)

14.43 b

Less

9.19 a (3)

Less
Less

9.46 a (3)
10.68 a (3)

Less
Less

10.17 a (3)
6.17 a (2)

Repaid

sooner

Fewer

11.68 = (3)
10.44 a (3)

Less disapproving

8.19 = (3)

Less

3.92 a (1)

Fewer singles, divorced

or separated
More owners, fewer
tenants
Higher

8.97 a (3)

10.63 a (4)
10.52 a (4)
9.91 a (4)

12.41 a (4)

114

S.E.G. Lea et al. / Economic psychology of consumer debt

acknowledged
debts to other creditors,
and those whose water debt
was more serious acknowledged
more additional debts. Public utility
companies differ from some of the other creditors we asked about, in
that they do not set out to lend people money, and people do not ask
their permission before borrowing from them (i.e. paying their bills
late or not at all). Furthermore
they have a well-structured
system of
reminders,
court proceedings,
and ultimately disconnection,
the first
stages of which, at least, are well known to their customers. However,
none of these differences
seemed to produce behaviour that was very
different from that shown towards other creditors.
Debt and financial strain
The overwhelming
impression
from the results is that debt is
primarily a problem of poverty, and in particular
of family poverty.
Compared with the Non-debtors,
the Serious debt group have lower
household income, are of lower socioeconomic
class, are less likely to
own their homes (and much less likely to own them free of a
mortgage), and have more children. Both these results agree with data
obtained by Berthoud and Kempson (1990) concerning problem debts.
It is particularly
striking that only 1% of the Non-debtor
group had
three or more children in their households. With the exception of the
effects of class, all these results are confirmed as independent
of one
another by the multivariate
analyses. There were also trends, though
they fall short of significance, for debtors to be less likely to be living
in two-adult households built round stable relationships.
On first-order
analysis, the debtor groups emerge as younger (again a finding agreeing with Berthoud and Kempsons, 1990, analysis), so presumably their
children are younger; it should be noted, however, that the multivariate analysis of credit-rating
group suggests a subsidiary
peak of
indebtedness
in the 45-54 age group. In all these respects, the Mild
debtors are intermediate
between the Non-debtors
and the Serious
debtors, which adds credibility to the results. The results here are
consistent with the classic cross-sectional
econometric
results on the
saving ratio (e.g. Bean 19461, which show that as income increases, so
does the proportion
of it that is saved; since running up debt is simply
a form of negative saving, it is in no way surprising that it is more
often done by those with low incomes.
There is considerable
evidence,
then, that debt is an unsought
consequence
of a households financial difficulties. Those difficulties

S.E. G. Lea et al. / Economic psychology of consumer debt

115

might arise simply from an impossible economic environment, from

individual financial incompetence, or (most likely) from a combination
- less competence is needed to keep ones head above water on an
income of over &20,000 a year than on one of under &5000. Perhaps
persistent debtors have poorly organized psychological accounts
(Ranyard 1988). This possibility does not exclude strategic use of
Hump debt. A mortgage is, in fact, the classic hump debt device,
allowing one to consume housing services which ones current income
is not sufficient to buy; postponing payments to credit card companies,
friends and family, and public utilities is simply a less legitimized
extension, but one which is available to people who cannot get a
footing on the mortgage system. It is interesting in this context that
there is a consistent consumer view about which household bills
should be paid off first, given limited funds (Figure 4).
The general trends, therefore, give no evidence that consumers are
fecklessly or carelessly running up debt. Compared with the results
obtained by Lunt and Livingstone (1991) on the explanations people
give of others debts, the data suggest that the causes of debts are
more external and economic than most people think: greed and lack
of self-control are not much in evidence in our data, whereas they are
central to the explanatory networks people produce when they are
asked why they think people run into debt. It is true that for each of
the trends outlined above, there were a minority even of the serious
debtors who did not accord with the general rule - who were of
higher social class, owned their own homes, had high incomes, had no
children, and so forth. However, the breakdown of the Serious debt
groups suggests that these were the people who had in fact recently
repaid their water debt. Possibly they included some feckless or even
strategic debtors, but if so it looks as though appropriate legal steps
were sufficient to make them repay their debts.
Secondly, however, we must bear in mind the low return rate,
especially in the debtor groups. If there is a group of feckless debtors,
they are probably the least likely people to fill in and return a
questionnaire that drops on them out of the blue. Methods other than
random postal surveys are going to be needed to reach this group if it
exists.
Several authors (e.g. Berthoud and Kempson 1990; Cameron and
Golby in press) have found that the amount of indebtedness increased
with income, whereas we found that debtors were more likely to be

116

S.E.G. Lea et al. / Economic

psychology of consumer

debt

young and to have low incomes. However, Cameron and Golby were
looking at crisis debtors, and Berthoud and Kempson at people who
were using credit rather than running up debts. Those with high
income can safely use larger credit facilities, and if things go wrong
are likely to be left with larger unmanageable debts. But our data
show that, as one would expect, everyday debt is nonetheless associated with low income.
Debt attitudes and a debtor culture?
But if economic factors play an important part in debt, social and
psychological factors are also relevant. Age effects were at least partly
independent of both economic and attitude variables, and in so far as
that is true, they are presumably also mediated by psychological
processes. The religious backgrounds of the groups were somewhat
different, and it is hard to avoid seeing the remnants of the Victorian
Non-conformist conscience in the higher numbers of this group among
the Non-debtors. The same could be said of the agnostic/atheist
group, also likely to represent a thought-out rather than a casually
acquired position. It should be noted, however, that none of the
religious affiliation effects emerged as independently significant in the
multivariate analysis (though the same trends were evident), so these
differences may just reflect the different characteristic affiliations of
those who are, for other reasons, more and less likely to be in debt.
There was clearly quite a lot of social support for debt among the
debtor groups. They were much more likely to know others who were
in debt, and less likely to think that others would disapprove of their
debts; 33% of Serious debtors thought that their friends would think it
normal to owe at least flO0 to a public utility company. While this is a
striking result, it is not a surprising one. The general trend of the
results shows that debt is primarily a consequence of poverty. The
social worlds of those who have little money are likely to contain many
other people who are experiencing the same difficulties and therefore
both understand and sympathise with them. In this relatively brief
questionnaire, we could make no attempt to determine whether the
friends and relations we referred to were reference groups for the
respondents in the technical sense, but in the absence of indications to
the contrary it is reasonable to suppose that they were.

S.E.G. Lea et al. / Economic psychology of consumer debt

117

Perhaps it is as a result of these social processes that the debtor

groups have somewhat different attitudes towards debt, so far as we
were able to measure them. Our attitude scale was only exploratory,
and as such deliberately involved a heterogeneous set of items, derived from a prioti considerations rather than systematic pre-testing
and item analysis. Nevertheless, it produced a satisfactory level of
reliability and no evidence of multifactorial structure, so it is reasonable to interpret its results. The group differences in attitudes were
not large, and all answers tended towards disapproval of debt. The
result is in agreement with data obtained by Berthoud and Kempson
(1990), who found a generally cautious attitude even to credit use.
Both results may reflect the fact that no-one really wants to be in
debt, or might simply be social desirability effects - perhaps the right
answer was too obvious in some of the questions. In both studies, too,
there is the almost inevitable problem of attitudes research: the
attitudes tested are general (e.g. approval of debt as a whole), while
the supposedly correlated behaviour is more specific (e.g. being slow
to pay the water bill). The small size of the attitudes effect is clearly
not due to correlation with other regressors (multicollinearity), however, because it emerges in the first-order analysis of group differences; nor is it any larger within credit-rating groups than between
them.
Although the effect is fairly small, it is still true that the debtor
groups are less disapproving of debt, and this is confirmed as an
independent
effect in the multiple regression. As always with an
attitude measure, however, we cannot be sure whether attitudes are
causing behaviour or a consequence of it. Earl (1991) has outlined
how a process of dissonance reduction (cf. Festinger 1957) might bring
attitudes into line with behaviour once debt has been irrevocably
incurred. Once again, a different methodology will be needed to
explore this area further. An obvious move would be to compare
scores on an improved debt attitude scale with one of the Protestant
Work Ethic scales (cf. Furnham 19901, with which it should be
expected to have direct links. Debt avoidance could reasonably be
seen as a variety of delay of gratification, which has been linked to the
Protestant Ethic by social scientists from Weber (1904/1976) to McClelland (1961).
In the context of attitudes to debt, it is worth noting the relative
youth of the debtor groups. There are two ways of looking at this. One

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S. E. G. Lea et al. / Economic

psychology of consumer debt

is to appeal to a concept of hump debt, analogous to the idea of

hump saving (Harrod 1948: chapter 2). Young people are likely to
have the financial responsibility
for young children, have generally not
reached peak earning capacity, and face higher current rents and
mortgage payments than those who established
themselves economically two or three inflationary
decades ago. On this view, debt is
something that many of this group will grow out of as middle age
brings them at least a little more financial security. There is some
support for this view in the fact that the age effects are less clear in
the multiple regressions.
The alternative
view is that among this
disadvantaged
generation
there may be growing up a greater acceptance of debt than earlier generations
have shown. Adverse economic
circumstances
can force individuals to run up some degree of debt,
and it does seem likely that attitudes
to debt will become more
permissive as a result. If at the same time, traditional
social taboos
against debt are being eroded by the wider availability of credit, those
attitudes might persist when individuals economic circumstances
subsequently improve. The result could be a self-sustaining
culture of
indebtedness.
The present data give more support to the hump debt
view than to the idea of a debt culture, but do not rule the latter out.
In particular, on all measures the very oldest respondents
(the 65-74
and 75 and over groups) show marked avoidance of debt, and this may
well reflect an abhorrence
of debt that was once marked throughout
British society but now no longer is.

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