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

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  • Garðarsdóttir, Ragna B.
  • Dittmar, Helga

Abstract

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.

Suggested Citation

  • Garðarsdóttir, Ragna B. & Dittmar, Helga, 2012. "The relationship of materialism to debt and financial well-being: The case of Iceland’s perceived prosperity," Journal of Economic Psychology, Elsevier, vol. 33(3), pages 471-481.
  • Handle: RePEc:eee:joepsy:v:33:y:2012:i:3:p:471-481
    DOI: 10.1016/j.joep.2011.12.008
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    References listed on IDEAS

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    Cited by:

    1. Marianela Denegri & María Baeza & Natalia Salinas-Oñate & Verónica Peñaloza & Horacio Miranda & Ligia Orellana, 2014. "Materialism in Pedagogy Students in Chile," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 117(2), pages 505-521, June.
    2. Rogers, Pablo & Rogers, Dany & Securato, José Roberto, 2015. "Sobre variáveis psicológicas em modelos de application scoring," RAE - Revista de Administração de Empresas, FGV-EAESP Escola de Administração de Empresas de São Paulo (Brazil), vol. 55(1), January.
    3. Nepomuceno, Marcelo Vinhal & Laroche, Michel, 2015. "The impact of materialism and anti-consumption lifestyles on personal debt and account balances," Journal of Business Research, Elsevier, vol. 68(3), pages 654-664.
    4. Soňa Lemrová & Eva Reiterová & Renáta Fatěnová & Karel Lemr & Thomas Tang, 2014. "Money is Power: Monetary Intelligence—Love of Money and Temptation of Materialism Among Czech University Students," Journal of Business Ethics, Springer, vol. 125(2), pages 329-348, December.
    5. Gasiorowska, Agata, 2014. "The relationship between objective and subjective wealth is moderated by financial control and mediated by money anxiety," Journal of Economic Psychology, Elsevier, vol. 43(C), pages 64-74.
    6. Elisaveta Sardžoska & Thomas Tang, 2015. "Monetary Intelligence: Money Attitudes—Unethical Intentions, Intrinsic and Extrinsic Job Satisfaction, and Coping Strategies Across Public and Private Sectors in Macedonia," Journal of Business Ethics, Springer, vol. 130(1), pages 93-115, August.
    7. Donnelly, Grant & Iyer, Ravi & Howell, Ryan T., 2012. "The Big Five personality traits, material values, and financial well-being of self-described money managers," Journal of Economic Psychology, Elsevier, vol. 33(6), pages 1129-1142.
    8. Donnelly, Grant & Ksendzova, Masha & Howell, Ryan T., 2013. "Sadness, identity, and plastic in over-shopping: The interplay of materialism, poor credit management, and emotional buying motives in predicting compulsive buying," Journal of Economic Psychology, Elsevier, vol. 39(C), pages 113-125.
    9. Yeniaras, Volkan & Akkemik, K. Ali & Yucel, Eray, 2016. "Re-considering the linkage between the antecedents and consequences of happiness," Journal of Economic Psychology, Elsevier, vol. 56(C), pages 176-191.
    10. French, Declan & McKillop, Donal, 2016. "Financial literacy and over-indebtedness in low-income households," International Review of Financial Analysis, Elsevier, vol. 48(C), pages 1-11.
    11. Kirk Warren Brown & Tim Kasser & Richard M. Ryan & James Konow, 2016. "Materialism, Spending, and Affect: An Event-Sampling Study of Marketplace Behavior and Its Affective Costs," Journal of Happiness Studies, Springer, vol. 17(6), pages 2277-2292, December.
    12. Carolina Rezende Pereira & Suzane Strehlau, 2016. "Social Bond Development Through Continuous Indebtedness," Journal of Consumer Policy, Springer, vol. 39(2), pages 241-259, June.
    13. Jingqiu Chen & Thomas Tang & Ningyu Tang, 2014. "Temptation, Monetary Intelligence (Love of Money), and Environmental Context on Unethical Intentions and Cheating," Journal of Business Ethics, Springer, vol. 123(2), pages 197-219, August.
    14. repec:exl:25engi:v:27:y:2016:i:5:p:594-606 is not listed on IDEAS
    15. Thomas Li-Ping Tang, 2016. "Theory of Monetary Intelligence: Money Attitudes—Religious Values, Making Money, Making Ethical Decisions, and Making the Grade," Journal of Business Ethics, Springer, vol. 133(3), pages 583-603, February.
    16. Thomas Tang & Toto Sutarso, 2013. "Falling or Not Falling into Temptation? Multiple Faces of Temptation, Monetary Intelligence, and Unethical Intentions Across Gender," Journal of Business Ethics, Springer, vol. 116(3), pages 529-552, September.

    More about this item

    Keywords

    Materialism; Debt; Financial well-being; Money-management; Income;

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance

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