2013 Conference

Financial Services

Financial Services

Habitual thinking and decision making in households are under the influence of social norms. If households feel that they deviate from this pattern, a sense of failure, guilt, and diminished self-worth can occur.According to the life conformity theory using lifecycle hypothesis, this self-inflicted stress can be either mitigated or exacerbated by one’s self-regulated mechanism. Therefore, the objectives of this study are to: 1) investigate the perceptional differences in credit card usage of others between those with a self-control problem and those without a problem; 2) explore the relationship between self-control and credit usage based on these two theoretical frameworks; and 3) observe the change of the perceptional differences in U.S households from 2001 to 2010. The Survey of Consumer Finances (SCF) from 2001 to 2010 will be used for this research. For the analysis, in addition to the descriptive analysis, ordinary least squares (OLS) regression analysis will be used to investigate the relationship between the self-control variable and perception to credit usage of other households. For those who have applied for any type of credit or loan in the last five years to mitigate the stress derived from a self-control problem in financial decision making, the dependent variable is the perception of others' credit usage. These are converted into continuous variables which are measured by the following categorical variable: “Please tell me whether you feel it is all right for someone like yourself to borrow money”, and “Do you think it is a good idea or a bad idea for people to buy things on an installment plan?” Three groups of explanatory variables are included in the model such as the self-control variable, socio-demographic variables, and preference variables (planning horizon, risk tolerance).