Over-indebtedness and the interplay of factual and mental money management: An interview study
AbstractPrevious research has shown that money management contributes to over-indebtedness. This article sheds new light on this relation by looking at factual money management and its mental underpinnings, mental accounting. In a conceptual model we propose that fuzzy factual and mental money management practices aggravated by lack of congruency between factual and mental structures play an important role in over-indebtedness. Twenty-five in-depth interviews deliver preliminary support for this proposition. Successful financial control seems to build on efficient and inter-coordinated factual and mental money management. This reduces the willpower necessary for controlling financial behavior and helps to prevent and fight over-indebtedness.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Queen Mary, University of London, School of Business and Management, Centre for Globalisation Research in its series Working Papers with number 34.
Date of creation: Apr 2010
Date of revision:
Contact details of provider:
Postal: Mile End Road, London E1 4NS
Web page: http://www.busman.qmul.ac.uk/research/cgr/index.html
More information through EDIRC
debt; money management; mental accounting; self-control;
Find related papers by JEL classification:
- D14 - Microeconomics - - Household Behavior - - - Personal Finance
- D1 - Microeconomics - - Household Behavior
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-05-08 (All new papers)
- NEP-CBE-2010-05-08 (Cognitive & Behavioural Economics)
- NEP-NEU-2010-05-08 (Neuroeconomics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Sarah Brown & Gaia Garino & Karl Taylor & Stephen Wheatley Price, 2005.
"Debt and Financial Expectations: An Individual- and Household-Level Analysis,"
Western Economic Association International, vol. 43(1), pages 100-120, January.
- Sarah Brown & Karl Taylor & Gaia Garino & Stephen Wheatley Price, 2003. "Debt and financial expectations: an individual and household level analysis," Discussion Papers in Economics 03/5, Department of Economics, University of Leicester, revised Feb 2004.
- DeVaney, Sharon A. & Lytton, Ruth H., 1995. "Household insolvency: A review of household debt repayment, delinquency, and bankruptcy," Financial Services Review, Elsevier, vol. 4(2), pages 137-156.
- Hayhoe, Celia Ray & Leach, Lauren & Turner, Pamela R., 1999. "Discriminating the number of credit cards held by college students using credit and money attitudes," Journal of Economic Psychology, Elsevier, vol. 20(6), pages 643-656, December.
- William R. Emmons, 2005. "Consumer-finance myths and other obstacles to financial literacy," Supervisory Policy Analysis Working Papers 2005-03, Federal Reserve Bank of St. Louis.
- Stone, Brice & Maury, Rosalinda Vasquez, 2006. "Indicators of personal financial debt using a multi-disciplinary behavioral model," Journal of Economic Psychology, Elsevier, vol. 27(4), pages 543-556, August.
- Brown, Sarah & Taylor, Karl & Wheatley Price, Stephen, 2005. "Debt and distress: Evaluating the psychological cost of credit," Journal of Economic Psychology, Elsevier, vol. 26(5), pages 642-663, October.
- Walker, Catherine M., 1996. "Financial management, coping and debt in households under financial strain," Journal of Economic Psychology, Elsevier, vol. 17(6), pages 789-807, December.
- Kirchler, Erich & Hoelzl, Erik & Kamleitner, Bernadette, 2008. "Spending and credit use in the private household," The Journal of Socio-Economics, Elsevier, vol. 37(2), pages 519-532, April.
- Pahl, Jan, 2008. "Family finances, individualisation, spending patterns and access to credit," The Journal of Socio-Economics, Elsevier, vol. 37(2), pages 577-591, April.
- Heath, Chip & Soll, Jack B, 1996. " Mental Budgeting and Consumer Decisions," Journal of Consumer Research, University of Chicago Press, vol. 23(1), pages 40-52, June.
- Shefrin, Hersh M & Thaler, Richard H, 1988. "The Behavioral Life-Cycle Hypothesis," Economic Inquiry, Western Economic Association International, vol. 26(4), pages 609-43, October.
- Drentea, Patricia & Lavrakas, Paul J., 2000. "Over the limit: the association among health, race and debt," Social Science & Medicine, Elsevier, vol. 50(4), pages 517-529, February.
- Burns, Maree & Burgoyne, Carole & Clarke, Victoria, 2008. "Financial affairs? Money management in same-sex relationships," The Journal of Socio-Economics, Elsevier, vol. 37(2), pages 481-501, April.
- Drazen Prelec & George Loewenstein, 1998. "The Red and the Black: Mental Accounting of Savings and Debt," Marketing Science, INFORMS, vol. 17(1), pages 4-28.
- Ranyard, Rob & Craig, Gill, 1995. "Evaluating and budgeting with instalment credit: An interview study," Journal of Economic Psychology, Elsevier, vol. 16(3), pages 449-467, September.
- Lea, Stephen E. G. & Webley, Paul & Levine, R. Mark, 1993. "The economic psychology of consumer debt," Journal of Economic Psychology, Elsevier, vol. 14(1), pages 85-119, March.
- Livingstone, Sonia M. & Lunt, Peter K., 1992. "Predicting personal debt and debt repayment: Psychological, social and economic determinants," Journal of Economic Psychology, Elsevier, vol. 13(1), pages 111-134, March.
- Mizuho Kida, 2009. "Financial vulnerability of mortgage-indebted households in New Zealand - evidence from the Household Economic Survey," Reserve Bank of New Zealand Bulletin, Reserve Bank of New Zealand, vol. 72, pages 5-12, March.
- Lawrance, Emily C, 1991. "Poverty and the Rate of Time Preference: Evidence from Panel Data," Journal of Political Economy, University of Chicago Press, vol. 99(1), pages 54-77, February.
- Lea, Stephen E. G. & Webley, Paul & Walker, Catherine M., 1995. "Psychological factors in consumer debt: Money management, economic socialization, and credit use," Journal of Economic Psychology, Elsevier, vol. 16(4), pages 681-701, December.
- Gourville, John T, 1998. " Pennies-a-Day: The Effect of Temporal Reframing on Transaction Evaluation," Journal of Consumer Research, University of Chicago Press, vol. 24(4), pages 395-408, March.
- Antonides, Gerrit & Manon de Groot, I. & Fred van Raaij, W., 2011. "Mental budgeting and the management of household finance," Journal of Economic Psychology, Elsevier, vol. 32(4), pages 546-555, August.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Pedro S. Martins).
If references are entirely missing, you can add them using this form.