Indebtedness in Early Adulthood (eBook)

Jeanette Carlsson Hauff received a PhD from the University of Gothenburg, Sweden, and is now an Assistant Professor at the same university. Her research focuses on consumer behaviour and financial services and she has been published in peer-reviewed international journals (such as European Journal of Marketing) and book chapters.Tommy Gärling was the endowed professor of psychology at University of Gothenburg, Sweden from 1992 to 2006. He is a fellow of the International Association of Applied Psychology (divisions of economic psychology, environmental psychology, traffic and transportation psychology) and was president of the environmental psychology division from 1998 to 2002. Ted Lindblom is Professor at the Department of Business Administration at the School of Business, Economics and Law, at the University of Gothenburg, Sweden. His current research mainly concerns industrial and financial management with particular focus on corporate finance, investment and financial structure decisions, banking, risk and regulation.

Preface 5
Contents 7
Notes on Contributors 9
List of Figures 12
List of Tables 14
Part I Introduction to Young Adults’ Indebtedness 17
Chapter 1 Why Study Young Adults’ Indebtedness? 18
1 Introduction 18
2 The Research Program 21
2.1 Project 1: Causes of Young Adults’ Borrowing Decisions 22
2.2 Project 2: Effects of Information Format on Borrowing 23
2.3 Project 3: Regulatory Actors and Their Tools 24
3 The Book’s Organization—A Brief Overview 26
3.1 The Structure of the Book 26
3.2 Chapter Overviews 28
4 Concluding Remarks 31
References 34
Chapter 2 Indebtedness, Over-Indebtedness and Wellbeing 36
1 Introduction 36
2 A Brief Literature Overview 38
2.1 Definitions of Over-Indebtedness 41
2.2 The Relationship Between Over-Indebtedness and Financial Exclusion 44
2.3 The Relationship Between Over-Indebtedness and Financial Literacy 45
2.4 Measuring Over-Indebtedness in Practice—An Illustration 46
3 Indebtedness and Over-Indebtedness in Numbers 50
3.1 Descriptive Statistics of European Households 50
3.2 Estimations of Societal Costs and Wellbeing Related to Over-Indebtedness in Sweden 55
4 Concluding Remarks 58
References 60
Chapter 3 The Loan Market—The Swedish Example 64
1 Introduction 64
2 The Swedish Financial Environment 65
3 The Swedish Loan Market 68
3.1 Mortgage Loans 68
3.2 Other Types of Consumer Credit 69
3.3 The Market for Unsecured Instant Loans 70
4 An International Comparison 71
4.1 The Total Loan Market 71
4.2 The Mortgage Market 72
5 Age Differences Among Borrowers 74
6 Concluding Remarks 74
References 75
Part II Psychological Factors Explaining Young Adults’ Indebtedness 77
Chapter 4 Young Adults’ Attitudes Toward Borrowing 78
1 Introduction 78
2 Definition and Measurement of Attitude Toward Borrowing 79
3 Review of Previous Studies 84
3.1 Antecedents of Young Adults’ Attitudes Toward Borrowing 84
3.2 Consequences of Young Adults’ Attitude Toward Borrowing 87
4 Measuring Attitude Toward Borrowing 90
5 Summary and Conclusions 94
References 97
Chapter 5 Young Adults’ Consumption Desires, Feelings of Financial Scarcity and Borrowing 101
1 Introduction 101
2 Borrowing and Purchasing 103
3 Affective/Cognitive Pre-decisional Information Processing 104
4 Borrowing Unawareness 110
5 Summary and Conclusions 114
References 117
Part III Financial Information and Young Adults’ Borrowing Decisions 121
Chapter 6 Impacts of Loan Communication on Young Adults’ Borrowing 122
1 Introduction 122
2 The Influence of Communication and Information on Behavior: The Importance of Involvement 124
2.1 Importance of Effective Communication and Accurate Information 124
2.2 Communication and Information Initiatives on Borrowing and Credit 126
2.2.1 The Importance of How Borrowing Information Is Presented: Loan Disclosure and Format 126
2.2.2 General Remarks and Observations 128
3 Two Studies of the Influence of Communication and Information About Borrowing Behavior 129
3.1 Does Clear Information Matter? 129
3.2 Storytelling as Influencing Involvement? 132
4 Conclusions and Implications 136
References 137
Chapter 7 Financial Literacy and Debt 140
1 Introduction 140
2 Financial Literacy 141
3 Financial Literacy Connected to Borrowing Decisions 142
4 Financial Inclusion 143
5 Measuring Financial Literacy 145
6 Empirical Effects of Financial Literacy on Debt-Related Financial Behavior 147
6.1 Financial Freedom 148
6.2 Debt and Income 149
6.3 Mortgage Loans 150
6.4 Fixed or Floating Mortgage Rates 151
6.5 Use of Consumer Credit 151
6.6 Use of Credit Cards 152
6.7 Use of Pawn Shops 153
6.8 Summary 155
7 Young Adults 156
8 Conclusion 157
References 158
Part IV Legislator Tools and Possibilities for Healthy Lending 161
Chapter 8 Toward Soundness in Provision of Credits and Loans to Young Adults 162
1 Introduction 162
2 An EU-Perspective on Policy Measures Against Over-Indebtedness 165
2.1 Public Policy Intervention 167
2.2 Individual Level Aid 168
3 Over-Indebtedness from a Legal Perspective: The Case of Sweden 173
4 Concluding Remarks 179
References 181
Author Index 185
Subject Index 192