A University of Missouri researcher says people who overuse credit have very different beliefs about products than people who spend within their means. Following a new study, Marsha Richins, Myron Watkins Distinguished Professor of Marketing in the Trulaske College of Business, says many people buy products thinking that the items will make them happier and transform their lives.
"There is nothing wrong with wanting to buy products," Richins said. "It becomes a problem when people expect unreasonable degrees of change in their lives from their purchases. Some people tend to ascribe almost magical properties to goods -- that buying things will make them happier, cause them to have more fun, improve their relationships -- in short, transform their lives. These beliefs are fallacious for the most part, but nonetheless can be powerful motivators for people to spend."
Richins identified four types of changes that materialistic people expect when making purchases. Previous research has shown that often these expectations are not fulfilled. The four types of transformations expected are:
People who have strong and unrealistic transformational beliefs are more likely than others to overuse credit and take on excessive debt. According to Richins, this finding highlights a limitation of financial literacy and credit counseling programs. She recommends that financial literacy and credit counseling programs be revised to help people better understand their motivations for purchasing goods and to help them recognize that products are not a quick fix for improving their lives.
"Many financial literacy programs seek to prevent people from getting into financial problems by presenting the facts about interests rate and loans," Richins said. "However, few programs seek to directly influence behavior or focus on why people purchase things they cannot afford and go into debt."
Cite This Page: