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Erschienen in:
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2018 | OriginalPaper | Buchkapitel

4. Financialization and Consumer Behavior

verfasst von : Jerry Buckland

Erschienen in: Building Financial Resilience

Verlag: Springer International Publishing

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Abstract

This chapter examines a number of issues to better understand consumer behavior with respect to credit and finance products. Consumerism is a powerful feature in the Global North and is becoming more commonplace in the Global South. Thus issues such as consumer debt, debt and mental health, and the relationship between consumption and advertising are important topics this chapter considers with respect to consumer behavior. Then the chapter digs into recent research from the behavioral school regarding human behavior and the use of credit and places insights from behavioral research into the context of collective behavior and structural barriers. The chapter then unpacks the concept of rationality in the context of decision-making around finance and examines common behavioral insights such as tunneling and unhelpful heuristics. The discussion of bounded rationality has limitations, and this point is explored. As we will see in Chap. 6, bounded rationality is not limited to vulnerable people but is a universal challenge.

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Vorheriges Kapitel New Areas of Commercial Banking Directed at Vulnerable People: Payday Lending and Mobile Banking
Nächstes Kapitel Credit, Cash, Savings, and Financial Literacy Delivered Through Civil Society
Fußnoten
1
This was the view, popularized by the actions of early twentieth-century automobile manufacturer Henry Ford, that the demand for his Model T car would increase if the production costs were brought down, through the introduction of the assembly line, thus allowing the price of the car to be within the reach of his factory workers.
 
2
This is precisely what I learned in interviewing Canadian bank executives a few years ago: that non-poor clients are more aggressive than poor clients in negotiating interest rates (Buckland 2009).
 
3
One important nuance is that some social capital is exclusive and harmful toward others, while other social capital is inclusive and possibly helpful toward others.
 
4
Zelizer adds a critique of her own discipline, sociology with the following, “Sociologists, to be sure, pay the opposite price: a potpourri of theories and observations so various that a researcher can rarely be sure that a new finding actually fits with or contradicts previously accumulated understandings of the economic process at hand” (Zelizer 2011, p. 10).
 
5
It is interesting to note that classical political economists had a more nuanced and varied view about human rationality. Adam Smith’s 1776 work on the wonders of the free market in The Wealth of Nations was informed by his earlier work, The Theory of Moral Sentiments. Humans are rational and a part of a morally minded society. Malthus argued that the pursuit of pleasure by people with limited discipline led them into a vicious cycle of poverty (Spechler 1990).
 
6
In some cases the term “financial capability” is used instead of or synonymously with “financial literacy”. When it is used this way, it generally refers to financial literacy and responsible financial behavior. In this sense, financial capability brings together the concepts of financial literacy and financial behavior.
 
7
Note that all three of these sources of retirement income are under pressure from various pressures, including financialization. Public retirement pensions in Canada, and I imagine elsewhere, are threatened because the rising share of retired to working people. Private pensions are increasingly defined contribution plans, and home equity is threatened by home equity loans and reverse mortgages, for example.
 
8
Many of examples and experiments come from either the United States or India. While these two countries have very different socio-cultural-economic contexts, they do not represent an international perspective so that this is a limitation of Mullainathan and Shafir’s study.
 
9
Mullainathan and Shafir make an interesting observation about the differences in how poor and non-poor value money (p. 89). Neoclassical economic theory hypothesizes that people will value a dollar the same regardless of the context and the study supported this in the case of the poor. But in the case of the poor what the study found is that the value placed on money depended on the context. To save $35 on a $100 DVD player is valued more highly (the same) than to save $35 on a $1000 laptop by the rich (poor) (p. 89).
 
10
Regarding education, many people—policymakers and poor alike—support more education as a means to address material scarcity. But rather than being offered in a linear and sequential manner, financial literacy could be taught using stand-alone modules with multiple and staggered start times, focusing on good rules of thumb (p. 174–75). This allows less bandwidth for each class and allows participants to experience early and ongoing success.
 
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Metadaten
Titel
Financialization and Consumer Behavior
verfasst von
Jerry Buckland
Copyright-Jahr
2018
Buch
Building Financial Resilience

Print ISBN: 978-3-319-72418-8

Electronic ISBN: 978-3-319-72419-5

Copyright-Jahr: 2018

DOI
https://doi.org/10.1007/978-3-319-72419-5_4