Predicting personal debt and debt repayment: psychological, social and economic determinants

While personal debt has grown rapidly in the United Kingdom in recent years, posing problems for individuals, families and society, little empirical research has been conducted to date on everyday experiences of debt. The present paper reports on the findings of an in-depth survey of the social, economic and psychological factors related to debt. Discriminant function analysis and multiple regression analysis were used to address three questions: what discriminates debtors from nondebtors; what determines how far people get into debt; and what determines how much of their debts people repay? Sociodemographic factors were found to play a relatively minor role in personal debt and debt repayment. Disposable income did not differ between those in debt and not in debt, although it predicted how far people were in debt and was most important in determining debt repayment. Attitudinal factors (being pro-credit rather than anti-debt, or seeing credit as useful but problematic) were found to be important predictors of debt and debt repayments. Further psychological factors, focusing on economic attributions, locus of control, coping strategies and consumer pleasure were found to be important, and a range of specific economic practices were also related to experiences of debt.