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Young adults’ borrowing to purchases of desired consumer products related to present‐biased temporal discounting, attitude towards borrowing and financial involvement and knowledge

Journal article
Authors Tommy Gärling
Patrik Michaelsen
Amelie Gamble
Published in International Journal of Consumer Studies
Volume 00
Issue 00
Pages 1-9
ISSN 1470-6423
Publication year 2019
Published at Department of Psychology
Centre for Finance
Department of Economics
Pages 1-9
Language en
Links https://doi.org/10.1111/ijcs.12552
Keywords attitude towards borrowing, consumer credit, feeling of financial deficit, financial involvement and knowledge, present-biased temporal discounting, young adult
Subject categories Psychology, Economics

Abstract

The aim is to investigate how present‐biased temporal discounting caused by feelings of financial deficit, attitude towards borrowing and financial involvement and knowledge determine young adults’ likelihood of borrowing to purchases of desired consumer products. A sample of 273 young adults aged 18–30 years answered an online questionnaire including experimental treatments to induce present‐biased temporal discounting, followed by questions about attitude towards borrowing, financial involvement/knowledge and financial resources. In different treatment conditions, participants rated the likelihood of borrowing to purchases of desired consumer products at prices judged to be unaffordable or to replace purchases of equally expensive products in the future but not immediately. In a control condition, participants rated the likelihood of borrowing to an equally expensive, already purchased product to be paid immediately. A higher likelihood of borrowing to purchases of the desired and already purchased unpaid products was observed, but the difference to the needed products was not statistically significant. Likelihood of borrowing was strongly suppressed by a negative attitude, in all between‐group conditions equally influenced by self‐assessed financial resources but unaffected by financial involvement/knowledge. Both financial involvement/knowledge and a negative attitude decreased choices of months of instalment payments with the consequence that the monthly repayment cost increased.

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