Key reason people pile up heavy credit card debt is false belief they have self-control: NUS-SUSS study

SINGAPORE — People who rack up heavy levels of credit card debt tend to kid themselves that they have good self-control, when they do not, a study has found.

Many of those who are mired in debt might think that they are actually skilful and making good use of the banking system by borrowing just enough to be able to meet all of their expenses, the study by the National University of Singapore (NUS) and Singapore University of Social Sciences (SUSS) found. 

But in fact, they are more likely to pile up more debt due to their inflated sense of self-control. The study examined the behaviour of "extreme debtors", defined as those with credit card debt at least 12 times their monthly income, across all age groups, genders and educational backgrounds.

The results of the study were published in May this year in the Journal of Personality, which publishes scientific investigations in the field of personality and behaviour dynamics.

NUS announced the results in a press statement on Tuesday (Aug 16).

HOW THE STUDY WAS CONDUCTED

The research team was led by Associate Associate Professor Jia Lile from the NUS' Department of Psychology and included NUS Business School PhD student Yuen Wei Lun, Dr Ong Qiyan from NUS Social Service Research Centre and Associate Professor Walter Theseira from SUSS.

It used a series of tests to compare the self-control profile of 1,442 extreme debtors in Singapore with those of two control groups — one sample of the general population, and another of students from an elite university, a group known to excel at self-control. 

The measuring of the control group took place in two waves.

In the first wave, 940 Singaporean adults and university students took a self-reported questionnaire called the brief self control scale (BSCS) test.

In the second wave, 576 Singaporean adults and university students completed the BSCS, along with two other tests relating to behavioural measurement.   

The self-control profiles of extreme debtors were compared with those of the two control groups.

THE FINDINGS  

The study concluded that extreme debtors scored very highly on measures that require them to rate their own self-control, higher, in fact, than for groups of Singaporeans with no debt problems. 

However, the extreme debtors scored badly on objective measures which are less based on their own self-reporting. 

The study results also showed that extreme debtors may face a double whammy of low self-control capacity reflected in their patterns of overspending and poor "inhibitory control", which refers to the ability to suppress or countermand a thought, action, or feeling. 

Prof Jia said that the combination of low self-control capacity and poor recognition is “perilous as debtors may place themselves in temptation-rich environments, such as convenient online shopping platforms, believing that they can suppress impulsive purchases when they actually can’t”.

Prof Theseira added that as a group, extreme debtors tend to think they have very good self control.

“Given how many temptations we are surrounded with daily, if you are not aware of your own self control issues, you may not take steps to protect yourself.”

The study called for early intervention to support people’s capacity to improve self-control, adding that an effective training programme would look towards training self-control capacity and "a less sanguine view of the debtor’s ability to control themselves". 

This means having debtors take up measures such as leaving credit cards at home and taking only cash to prevent themselves from falling into temptation in the first instance.

“What this actually goes to show is that improving your actual ability to resist temptation is actually incredibly difficult,” he said.

WHY IT MATTERS

The authors of the study told TODAY that they hoped people will realise the difficulties extreme debtors face in knowing their actual level of self control.

Dr Ong said that an effective way to help such individuals is to enable them to be self aware about their own inflated sense of self control.

“This can prompt them  to take steps to remove themselves from situations of temptation, so that they will not sink further into financial trouble.''

Agreeing, Prof Theseira said that while there is no "magical test" that can identify whether people can be diagnosed on whether they can resist temptation or not, systematically removing possibilities is a good way for people in debt to be able to test their self control.

He also addressed broader issues, such as the availability of large amounts of credit to people who are unable to regulate their spending, adding that the finance and credit industry can be exploitative of people’s challenges over self-control.

“Although I would say the majority of people manage to get through these problems and the day to day basis without  spending extensively or getting into problems, there are those among us who for one reason or another —  many cases no fault of their own — are unable to take the necessary measures to protect themselves against this consumer context and lending context.” 

He added that if necessary, they should take the steps to cut themselves off, at least to some extent, from a lifestyle of incessant borrowing. 

“I think there should be no shame in doing that. And I think society should support them.” 

According to data provided by the Ministry of Law, there were 2,061 applications for bankruptcy and 630 bankruptcy orders issued from January to July this year. During 2021, 3,160 applications for bankruptcy were filed and 1,003 bankruptcy orders were issued.

Credit Counselling Singapore chairman Ang Hao Yao said that the insights of the study would be able to help CCS to further improve its counselling and support to debtors “to help build awareness of their self-control capacity, which could help them to better keep up with their repayment plan”.

He added that the non-profit organisation encourages its clients to track and review their expenses so that they can make adjustments to their spending behaviours.