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The relationship of materialism to debt and financial well-being: The case of Iceland’s perceived prosperity

  • Garðarsdóttir, Ragna B.
  • Dittmar, Helga
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    In Iceland, levels of debt had risen to an unprecedented extreme in the years prior to the country’s economic collapse in October 2008. This rise occurred in the context of a consumer culture highlighting supposed psychological benefits of consumer goods. This paper reports findings from two studies, conducted during an economic boom in Iceland, examining the association of materialism and indicators of financial well-being: amount of debt, financial worries, spending tendency, money-management skills and compulsive buying. Study 11Study 2 was originally presented at the Thjodarspegill Conference at the University of Iceland, October, 2009. Study 1 was part of the first author’s doctoral thesis work, originally presented at the Nordic Consumer Conference in Helsinki 2007.1 (N=271) showed that people who endorse materialistic values have more financial worries, worse money-management skills and greater tendency towards compulsive buying and spending. Study 2 (N=191) replicates the findings of Study 1 and further shows that amount of debt, including mortgage, can be directly linked to materialism, controlling for income and money-management skills. The research contributes to the psychology of materialism and overspending and provides an evidence-based foundation for designing interventions encouraging individuals to improve their financial well-being.

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    File URL: http://www.sciencedirect.com/science/article/pii/S0167487011001942
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    Article provided by Elsevier in its journal Journal of Economic Psychology.

    Volume (Year): 33 (2012)
    Issue (Month): 3 ()
    Pages: 471-481

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    Handle: RePEc:eee:joepsy:v:33:y:2012:i:3:p:471-481
    Contact details of provider: Web page: http://www.elsevier.com/locate/joep

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    1. 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.
    2. England, Richard W., 1998. "Measurement of social well-being: alternatives to gross domestic product," Ecological Economics, Elsevier, vol. 25(1), pages 89-103, April.
    3. Watson, John J., 2003. "The relationship of materialism to spending tendencies, saving, and debt," Journal of Economic Psychology, Elsevier, vol. 24(6), pages 723-739, December.
    4. 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.
    5. Kirk Brown & Tim Kasser, 2005. "Are Psychological and Ecological Well-being Compatible? The Role of Values, Mindfulness, and Lifestyle," Social Indicators Research, Springer, vol. 74(2), pages 349-368, November.
    6. Hazel Christie & Susan J Smith & Moira Munro, 2008. "The emotional economy of housing," Environment and Planning A, Pion Ltd, London, vol. 40(10), pages 2296-2312, October.
    7. Etzioni, Amitai, 1988. "Normative-affective factors: Toward a new decision-making model," Journal of Economic Psychology, Elsevier, vol. 9(2), pages 125-150, June.
    8. Richins, Marsha L. & Rudmin, Floyd W., 1994. "Materialism and economic psychology," Journal of Economic Psychology, Elsevier, vol. 15(2), pages 217-231, June.
    9. 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.
    10. Burroughs, James E & Rindfleisch, Aric, 2002. " Materialism and Well-Being: A Conflicting Values Perspective," Journal of Consumer Research, University of Chicago Press, vol. 29(3), pages 348-70, December.
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