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The Impact of Social Factors on Overspending on Credit Cards Among Young Consumers
Summary
Veneta Sotiropoulos
Much of the research in marketing that has focused on identifying the reasons why
individuals overspend on credit cards has, for the most part, ignored the potential impact of an
individual’s social environment and, thus, seems to be at odds with research in the social sciences.
Instead, much of the research in marketing has largely attributed the cause of overspending on credit
cards to psychological factors such as attitudes toward credit/debt (e.g., Livingstone & Lunt, 1992)
and to self control–related constructs, such as compulsive buying behavior (d’Astous, 1990) and
perception of self-control (Tokunaga, 1993). According to this perspective, those who have more
favorable attitudes toward credit and/or debt, and who have difficulty believing that they can control
themselves, along with a tendency not to control themselves in consumption settings, are more at risk
of overspending on credit cards (OCC). This, despite the fact that social science research has shown
that social factors such as social norms impact not only behavior (Cialdini & Trost, 1998), but also
each other (Cialdini, Reno & Kallgren, 1990). It has also been shown that strength-of-ties moderates
the relationship between norms and behavior (Knack, 1992). Therefore, it appears that an individual’s
social environment is likely to influence the extent to which he or she is likely to overspend on credit
cards.
In the present investigation, the impact of social factors on overspending related to credit
cards is examined. OCC refers to the act of spending more than an individual is able to pay back in a
given period and for which he or she is required to pay interest on the unpaid balance. The present
study focuses on the impact and interaction of two specific types of social norms, namely creditrelated norms and experiential norms. Credit-related norms are defined as the perceptions an
individual has about how much referent others overspend on credit cards, how prevalent credit card
debt is among such people, as well as the propensity for such individuals to overspend using credit
cards. On the other hand, experiential norms refer to the perceptions an individual has about the
extent to which he or she feels he or she should be consuming in shared experiences at the same level
as referent others (e.g., with friends) and how much he or she should be spending on those shared
experiences. The present study focuses on the moderating impact that experiential norms have on the
relationship between credit-related norms and OCC. It also focuses on the moderating impact that
social ties and, more specifically, strength-of-ties ─ that is, the intensity of social relations among
consumers ─ have on the relationship between social norms and OCC.
Theoretically speaking, we expect that credit-related norms serve as markers for individuals
and that the higher those credit-related norms are the more individuals will overspend on their credit
cards. However, we expect such credit-related norms effects to be present only when individuals are
in shared experiences whereby they feel as though they are expected to consume at the same level as
referent others in those shared experiences and to spend higher amounts for those shared experiences,
and only if they are strongly connected to such individuals.
Methodologically, 225 students from a major American university were asked to fill out two
questionnaires. The first questionnaire measured social norms and strength-of-ties, whereas the
second measured OCC. The second questionnaire was also administered two weeks later to minimize
learning effects. Several measures for each construct were collected, including (1) the amount and
propensity toward credit card debt, (2) the likelihood, percentage, amount, and propensity associated
with norms related to credit card debt and credit card debt prevalence, (3) the amount and propensity
related to socially shared consumption with referent others (i.e., friends), and (4) the number,
importance, frequency, and strength of social ties.
The results revealed a three-way interaction between credit-related norms, experiential norms
and strength-of-ties. When individuals had strong-ties, both credit-related norms and experiential
norms were necessary to increase OCC. Conversely, when individuals had weak ties, the results
revealed that neither credit-related norms nor experiential norms had an impact on OCC. These
results demonstrate that OCC is affected by credit-related norms only when individuals are in shared
experiences whereby they feel as though they are expected to consume at the same level as referent
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others and to spend higher amount in those shared experiences and only if they are strongly connected
to such individuals.
The present study makes a significant and important contribution to the marketing discipline
by providing an alternative explanation as to why individuals overspend on credit cards. It is the first
study to demonstrate that social factors influence the consumer credit card experience. It shows that
norms that are specific to OCC (i.e., credit-related norms) and that incorporate the perceived
expectation of others in socially shared consumption (i.e., experiential norms) interact together to
influence OCC. It is also the first study to demonstrate the interaction between norms and social ties
in the context of credit-related behavior. It shows that the relationship that exists between social
norms is further influenced by the extent to which individuals are strongly associated with important
referent others. In other words, the present study highlights the importance and impact of an
individuals’ social network on OCC.
The present findings also have several important managerial, policy, and well-being
implications. From a managerial perspective, it provides insight for marketing practitioners and brand
managers as well as communication agencies about the interaction effect that key factors (i.e., social
norms and social ties) in a social network have on increasing consumption. More specifically, it
indicates the importance of strength of associations that individuals have and the expectation that
others have on individuals' perception of what is normal behavior related to overspending on credit
cards. From a policy perspective, it provides a platform from which social programs can be
developed. Such programs would provide individuals with a template and tools to understand and
develop social networks that could change social perceptions within social networks and reduce their
OCC instead of increasing it. Such programs can also be used to reduce other risk-related behaviors
(e.g., drinking and driving, smoking, and drug use) or to increase pro-social behavior (i.e., exercising,
civic participation, volunteering). Finally, from a social well-being standpoint, the present research
generates awareness to those individuals who are not necessarily conscious of the impact of their
social environment and who underestimate the impact of their social network on risk-related behavior
such as OCC.
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