A unique study led by Associate Professor Jia Lile from the Department of Psychology in the Faculty of Arts and Social Sciences at the National University of Singapore (NUS) found that extreme debtors have little ability to regulate their behavior but hold illusory perceptions of high capacity, which may expose them to further debt accumulation.
The study, conducted in collaboration with Singapore University of Social Sciences (SUSS) and with support from Credit Counseling Singapore (CCS), used a combination of a self-report questionnaire and behavioral measurements to profile extreme debtors (defined as those who owed credit card debt that was 12 times or more their monthly income) with two control groups.
Assoc Prof Jia said: “There is an urgent need to identify and measure risk factors behind the global debt crisis that has been exacerbated by the COVID-19 pandemic. Previous studies have focused on differences in indebtedness in the general population, but few have examined how those experiencing extreme and persistent indebtedness rate their own ability to control themselves and how this affects their past behavior.Use of behavioral measures in our study also allowed us to identify potential biases in the responses from self-report questionnaires, a result of respondents’ mental interpretation leading to bias in the way they respond.”
The results of the study were published in Personality Magazine in May of this year.
Studying the self-control profiles of extreme debtors
The research team, which also includes NUS Business School Ph.D. Student Mr. Yuen Wei Lun, Dr. Ong Qiyan from the NUS Social Service Research Center and Assoc. In a series of tests, Prof. Walter Edgar Theseira of SUSS compared the self-control profile of 1,442 extreme debtors in Singapore with that of two control groups – a sample of the general population and university students.
Data on both control groups were collected in two waves.
Wave 1 of 940 Singaporean adults and university students completed only the Brief Self Control Scale (BSCS) test – a self-report questionnaire.
Wave 2 of 576 Singaporean adults and university students completed the following three tests:
- the BSCS test;
- A measure of the behavioral intent of the consumption pattern – subjects were asked questions about their ideal and expected consumption of imaginary meal vouchers valid for two years. Larger expected versus ideal gaps (or EI gaps) reflect patterns of overconsumption and low self-control over spending; and
- An executive function test known as the flanker test, which is a series of tests used to assess selective attention and inhibitory function. The highest scores indicate greater inhibitory control—a critical component of self-control.
An exploratory analysis comparing extreme debtors’ BSCS test scores with those of wave 1 control groups confirmed the notion of overestimation of self-control among extreme debtors, who reported the highest self-control capacity when they should have the lowest.
A confirmatory analysis was performed comparing the three extreme debtor test scores with those of wave 2 control groups. Replicating the BSCS results from Wave 1, extreme debtors reported the highest levels of self-control. However, they showed the lowest self-control capacity in terms of EI gap and flanker performance compared to the control groups, consistent with the theoretical proportional relationship between self-control and personal debt.
Assoc Prof Jia said: “Our study found that extreme debtors across all demographic groups reported surprisingly high levels of self-control, while performing poorly on objective measures of their ability to self-control. We were also able to show that this effect was unlikely due to debtors’ desire to present themselves well in front of the researcher or for some reason of debt accumulation. The combination of low self-control ability and lack of recognition is dangerous as debtors can put themselves in tempting environments , such as convenient online shopping platforms that believe they can quell impulse buying when they actually can’t.”
“Despite consumer finance regulation and education efforts, private debt is an evergreen problem. While many financial education programs emphasize the importance of knowledge, planning, and self-control, we show that people often fail to understand that their ability to exercise self-control is relative, which puts them at risk of serious debt accumulation, which in turn has been shown in other research to be ability to self-control is further compromised. Early intervention to support people’s ability to improve self-control is critical to stopping the cycle of debt,” added Assoc. Prof. Theseira.
The study’s findings have important implications for policymakers and other relevant support organizations in designing intervention programs to help debtors improve their self-regulatory behavior.
CCS Chairman Mr. Ang Hao Yao said: “The insights from the study can help CCS further improve our advice and support to debtors to raise awareness of their ability to self-regulate, which could help them better to keep up with their repayment schedule. CCS encourages customers to track and review their spending so they can make adjustments to their spending behavior.”
The study found that despite the prevailing understanding that self-reported questionnaires are superior to measures of behavior, the BSCS, one of the most widely used self-monitoring questionnaires, did not reflect the purported relationship between self-monitoring and personal debt. It was the two behavioral measures that correctly distinguished extreme debtors as the struggling group.
The research team found that such biases in the self-report questionnaires may affect those who have moderate self-control problems with debt accumulation. Going forward, they will continue to investigate the extent and course of how social cognitive processes influence personal assessments of self-control and ways to improve self-report accuracy.
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Lile Jia et al, Pitfalls of Self-Reported Self-Regulation Measures: Surprising Findings from Extreme Debtors, Personality Magazine (2022). DOI: 10.1111/jopy.12733
Provided by the National University of Singapore
Citation: Extreme Debtors May Accumulate Debt Due to Over-Control
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