Credit Card Misuse Money Attitudes Compulsive

Buying Marketing Essay

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This study examined attitudinal and behavioral differences between internal and external locus of
control (LOC) consumers on credit card misuse, the importance of money, and compulsive buying.
Using multiple analysis of variance and separate analyses of variance, internal LOC consumers were
found to have lower scores on credit card misuse and attitudes toward money than external LOC
consumers. External LOC consumers were found to have scores closer to compulsive buying
behaviors. Chi-square test of independence revealed that the proportion of external LOC consumers
classified as compulsive buyers was significantly higher than the proportion of internal LOC consumers
classified as compulsive buyers.
With credit card debt, loan defaults, and other financial problems on the rise, researchers have focused
greater attention on understanding the factors that explain college students' behavioral and attitudinal
differences toward credit cards, money, and compulsive purchases (Joo, Grable, & Bagwell, 2003;
Palmer, Pinto, & Parente, 2001; Pirog & Roberts, 2007). An underutilized construct that may explain
such differences is locus of control (LOC). Defined as the extent to which individuals believe that they
control their outcomes, LOC consists of two distinct belief orientations (Rotter, 1966; Lira, Teo, & Loo,
2003): (1) internals, who perceive that they control what happens to them; and (2) externals, who
perceive that factors outside of their control influence what happens to them.
Although LOC research in marketing has focused on predicting behavioral differences between
internals and externals in buying situations (Kongsompong, 2006; Rudnick & Deni. 1980), there are
limited studies that examine the attitudinal and behavioral differences between internals and externals
on credit card misuse (Pirog & Roberts, 2007), money attitudes (Lim et al., 2003), and compulsive
buying. This is unfortunate, because external LOC persons feel the need to gain control of their lives
through external controls in their environment (DeSarbo & Edwards, 1996; Kongsompong, 2006). As
such, research studies have suggested that external LOC consumers and internal LOC consumers
hold discrepant views toward credit, money, and purchase behaviors. Specifically, externals are
believed to have more positive attitudes toward money and credit (Joo et al., 2003; Luna-Arocas &
Tang, 2004), are less likely to manage credit cards and money responsibly (Hayhoe, Leach, & Turner,
1999; Lea, Webley, & Walker, 1995; Tokunaga, 1993), and are more likely to shop compulsively
(DeSarbo & Edwards, 1996; Dessart & Kuylen, 1986) than internals.
This paper examines the attitudinal and behavioral differences between internal and external LOC
consumers on credit card misuse, the importance of money, and compulsive purchasing. Based on the
preceding discussion, it is predicted that internal LOC consumers will have lower scores than external
LOC consumers on credit card misuse (H1) and money attitudes (H2), whereas external LOC
consumers will have scores closer to compulsive buying behaviors (H3) and a significantly higher
proportion of compulsive buyers (H4) than internal LOC consumers.
Method
Self-report surveys were administered in class to 129 undergraduate and graduate students attending
two public universities located in the midwestern and eastern United States. Three incomplete
questionnaires were excluded from the final analysis. The final sample was comprised of 126
respondents. The questionnaire took approximately 20 minutes to complete.
Respondents ranged in age from 19 to 49 (mean = 26.4, standard deviation [sd] = 6.53). A total of 71
undergraduate students (56.3 percent) and 55 graduate students (43.7 percent) completed the
questionnaire. The sample consisted of 83 males (65.9 percent) and 43 females (34.1 percent). Most
of the sample was Caucasian (77.8 percent) followed by Asian (10.3 percent), African American (6.3
percent), and Hispanic (4.8 percent). More than half (52.4 percent) of the respondents reported an
annual family income of $80,000.
Measures
Respondents were grouped into internal and external categories using a median split of the 14-item,
five-point Likert (e.g., strongly disagree to strongly agree) consumer locus of control (CLOC) scale
developed by Busseri, Lefcourt, and Kerton (1998). Higher CLOC scale scores indicate greater
externality in LOC orientation (Busseri et al., 1998). Analysis found the median score on the CLOC to
be 2.79. Of the 126 respondents, 55 (43.7 percent) were categorized as having an internal orientation
(CLOC 2.79). A list of scale items is provided in Table 1.
Credit Card Misuse Measure
Credit card misuse was measured using a 12-item, five-point Likert scale (e.g., strongly disagree to
strongly agree) developed by Roberts and Jones (2001). Individuals with higher scale scores could be
viewed as being less responsible using credit cards. The scale exhibited good internal consistency for
the current study ([alpha] = .78). A list of scale items is provided in Table 2.
Money Attitude Measure
A modified version of Yamauchi's and Templer's (1982) money attitude scale was used to measure
respondents' attitudes toward money (Roberts & Jones, 2001). The 20-item, seven-point Likert scale
ranged from never to always. Individuals with higher scale scores could be viewed as being less
responsible with money. The scale exhibited good internal consistency for the current study ([alpha] =
.85). Scale items are provided in Table 3.
Compulsive Buying Measure
Faber's and O'Guinn's (1992) sevenitem clinical screener was used to assess compulsive buying in the
current study. Faber and O'Guinn (1992, p. 459) define compulsive buying as "a chronic, repetitive
purchasing that becomes a primary response to negative events or feelings". Item scores are used to
construct a weighted algorithm to classify respondents as compulsive or noncompulsive buyers. Table
4 contains the scale items and scoring algorithm. Lower scores indicate higher compulsivity.
Respondents with an algorithm score of -1.34 or less are classified as compulsive buyers. The scale
exhibited good internal consistency for the current study ([alpha] = .80).
Results
A one-way multivariate analysis of variance was performed to examine differences between internal
and external LOC consumers on their credit card misuse, money attitudes, and compulsive buying
behaviors. There was a statistically significant difference between internal and external LOC
consumers on the combined dependent variables: [F(3,122) = 3.14,p = .028]. An ANOVA was
conducted on each dependent variable as a follow-up test to MANOVA. H 1 predicted that internal LOC
consumers would score lower on credit card misuse than external LOC consumers. The results
indicated a marginally significant difference on the credit card misuse measure [F (1,124) = 3.65,p =
.058, partial [eta.sup.2] = 0.03]. Internal LOC consumers (M = 1.89, SD = 0.59) had lower scores on
credit card misuse than did external LOC consumers (M = 2.13, SD = 0.77). Thus, H1 was partially
supported.
H2 predicted that internal consumers would score lower on the money attitude scale than external LOC
consumers. The results indicated a statistically significant difference on money attitudes [F (1, 124) =
7.65, p = .007, partial [eta.sup.2] = 0.06]. Internal LOC consumers (M = 2.94, SD = 0.84) had lower
scores on the money attitude scale than did external LOC consumers (M = 3.35, SD = 0.80). Thus, H2
was supported.
H3 predicted that external LOC consumers would have scores closer to compulsive buying behaviors
than internal LOC consumers. The results indicated a statistically significant difference on the
compulsive buying measure [F (1,124) = 6.05, p = .015, partial [eta.sup.2] = 0.05]. External LOC
consumers (M = 0.79, SD = 2.16) had scores closer to compulsive buying behavior (algorithm score < -
1.34) than internal LOC consumers (M = 1.62, SD = 1.43). Thus, H3 was supported.
Chi-square test for independence was used to test whether the proportion of external LOC consumers
classified as compulsive buyers would be significantly higher than the proportion of internal LOC
consumers classified as compulsive buyers (H4). As shown in Table 5, there is a significant difference
([chi square] = 4.25, p = .039) between the proportions of external LOC consumers (19.7 percent) and
internal LOC consumers (5.5 percent) classified as compulsive buyers. Thus, H4 was supported.
Discussion
The findings suggest that locus of control may explain why consumers differ in their attitudinal and
behavioral responses toward credit card misuse, money, and compulsive buying. External LOC
consumers are more likely to use external controls, such as financial resources and purchasing
activities, to achieve a sense control in their lives. The results of this study support this. Specifically,
internal LOC consumers scored lower on the credit card misuse and money attitude measures than
external LOC consumers. External LOC consumers had scores closer to compulsive buying behaviors
than internal LOC consumers. Finally, a significantly higher proportion of external LOC consumers
were classified as compulsive buyers than internal LOC consumers.
It should be noted, however, that the results of the current study may not be generalizable to other
populations. Data was collected on the campuses of two public universities. Future studies should be
conducted with the general population and college students from different university types and
locations. Despite this limitation, the current study extends research on locus of control and its impact
on consumers' attitudes and behaviors toward financial responsibility and purchasing activities.
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