Featured Research

from universities, journals, and other organizations

People More Likely To Overestimate Their Credit Quality

Date:
June 4, 2008
Source:
Wiley-Blackwell
Summary:
A new study examined consumers’ self-assessments of their credit rating and found that respondents were more likely to believe they had average or above average credit and those who overestimated their credit quality were less likely to budget, save, and invest regularly.

A new study examined consumers’ self-assessments of their credit rating and found that respondents were more likely to believe they had average or above average credit and those who overestimated their credit quality were less likely to budget, save, and invest regularly.

The study's author, Vanessa Gail Perry, Assistant Professor at the George Washington University School of Business, concludes that "Overestimating credit ratings is partly a function of a lack of financial sophistication. In addition, it appears that people who have overestimated their credit rating take less care in managing their finances.”

Professor Perry analyzed data from the Freddie Mac Consumer Credit Survey. The survey collected data on attitudes, behaviors, knowledge and experiences with credit and financial management from around 23,000 people. Results indicate that approximately 32 percent of respondents overestimated their credit ratings, while only four percent underestimated their credit ratings. The findings support previous studies in judgment and decision-making that show that individuals are more likely to be overconfident about their knowledge or abilities.

Those who overestimated their credit ratings had lower incomes, less formal education, and were less likely to own their homes. They were also more likely to be African-American, Hispanic, or female. One possible explanation for these results is that minority consumers in general have less experience with financial markets which in turn affects their tendency to overestimate their credit rating.


Story Source:

The above story is based on materials provided by Wiley-Blackwell. Note: Materials may be edited for content and length.


Journal Reference:

  1. PERRY et al. Is Ignorance Bliss? Consumer Accuracy in Judgments about Credit Ratings. Journal of Consumer Affairs, 2008; 42 (2): 189 DOI: 10.1111/j.1745-6606.2008.00104.x

Cite This Page:

Wiley-Blackwell. "People More Likely To Overestimate Their Credit Quality." ScienceDaily. ScienceDaily, 4 June 2008. <www.sciencedaily.com/releases/2008/06/080602152910.htm>.
Wiley-Blackwell. (2008, June 4). People More Likely To Overestimate Their Credit Quality. ScienceDaily. Retrieved September 18, 2014 from www.sciencedaily.com/releases/2008/06/080602152910.htm
Wiley-Blackwell. "People More Likely To Overestimate Their Credit Quality." ScienceDaily. www.sciencedaily.com/releases/2008/06/080602152910.htm (accessed September 18, 2014).

Share This



More Mind & Brain News

Thursday, September 18, 2014

Featured Research

from universities, journals, and other organizations


Featured Videos

from AP, Reuters, AFP, and other news services

Corporal Punishment on Decline, Debate Renews

Corporal Punishment on Decline, Debate Renews

AP (Sep. 16, 2014) Corporal punishment in the United States is on the decline, but there is renewed debate over its use after Minnesota Vikings running back Adrian Peterson was charged with child abuse. (Sept. 16) Video provided by AP
Powered by NewsLook.com
FDA Eyes Skin Shocks Used at Mass. School

FDA Eyes Skin Shocks Used at Mass. School

AP (Sep. 15, 2014) The FDA is considering whether to ban devices used by the Judge Rotenberg Educational Center in Canton, Massachusetts, the only place in the country known to use electrical skin shocks as aversive conditioning for aggressive patients. (Sept. 15) Video provided by AP
Powered by NewsLook.com
Shocker: Journalists Are Utterly Addicted To Coffee

Shocker: Journalists Are Utterly Addicted To Coffee

Newsy (Sep. 13, 2014) A U.K. survey found that journalists consumed the most amount of coffee, but that's only the tip of the coffee-related statistics iceberg. Video provided by Newsy
Powered by NewsLook.com
'Magic Mushrooms' Could Help Smokers Quit

'Magic Mushrooms' Could Help Smokers Quit

Newsy (Sep. 11, 2014) In a small study, researchers found that the majority of long-time smokers quit after taking psilocybin pills and undergoing therapy sessions. Video provided by Newsy
Powered by NewsLook.com

Search ScienceDaily

Number of stories in archives: 140,361

Find with keyword(s):
Enter a keyword or phrase to search ScienceDaily for related topics and research stories.

Save/Print:
Share:

Breaking News:
from the past week

In Other News

... from NewsDaily.com

Science News

Health News

Environment News

Technology News



Save/Print:
Share:

Free Subscriptions


Get the latest science news with ScienceDaily's free email newsletters, updated daily and weekly. Or view hourly updated newsfeeds in your RSS reader:

Get Social & Mobile


Keep up to date with the latest news from ScienceDaily via social networks and mobile apps:

Have Feedback?


Tell us what you think of ScienceDaily -- we welcome both positive and negative comments. Have any problems using the site? Questions?
Mobile: iPhone Android Web
Follow: Facebook Twitter Google+
Subscribe: RSS Feeds Email Newsletters
Latest Headlines Health & Medicine Mind & Brain Space & Time Matter & Energy Computers & Math Plants & Animals Earth & Climate Fossils & Ruins