Young people may be smitten with credit cards and debt, but their elders enable such tendencies by encouraging the younger generation's use of a credit as a sort of "safety mechanism."
That's one finding of a new study by researchers Michelle Barnhart, an assistant professor of marketing at Oregon State University, and Lisa Penaloza of the Ecole des Hautes Etudes Commerciales du Nord of France.
"New" is a relative term here; the study was published online this month, but the research was conducted five years ago, well before the 2008-09 financial crisis. The study also suffers from smallness, because it's based on case-study interviews with only 27 people, all white, middle-class and living in the United States. Not incidentally, half of the participants had debt they couldn't pay while one-third were dealing with collection agencies.
Still, the findings offer an intriguing window into how some of the attitudes, perceptions and cultural meanings that surround the use of debt and credit could have contributed to the economic recession.
The researchers found that consumers take on significant debt, even though they say they believe they shouldn't, because doing so has become normal to them. One participant even said taking on debt was "the American way."
The researchers also found the subjects suffered from a lack of financial literacy. All of the participants reported that they'd learned about credit and debt primarily through personal experience, not at school or home. Most said they didn't discuss their family's finances with their children.
Moreover, participants talked about credit as a measure of their own worth, saying that if they were approved for a certain loan, they felt they were "good enough for that car."
Several younger participants said they didn't want to use credit, but felt they had to, so they could finance cars and homes in the future. Most said their parents encouraged them to have credit cards.
"Over time, credit card use and heavy debt has become normalized in our culture," Barnhart said in a university statement about the study. "Even though we, as a society, say 'don't get in debt,' the overwhelming messages being sent out -- from the way credit is used to approve or disapprove us for services to political leaders telling us to spend after a big disaster to prove our patriotism -- all of this has created a culture of debt."
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