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Young Britons less sceptical about foreign engagements


Poor financial literacy not the only cause of debt


POOR FINANCIAL LITERACY and lack of self-control contribute to problem debt, according to a study of the relationship between self-control, financial literacy and over-indebtedness on UK consumer credit debt. Researchers investigated how


consumers’ understanding of financial information affects the way they use credit and debit including credit cards, personal loans and payday loans. To examine consumer financial understanding, otherwise known as ‘financial literacy’, researchers tested a sample of consumers on their knowledge of financial concepts such as interest compounding and real versus nominal returns, plus understanding of information such as Annual Percentage Rates (APRs) on credit agreements. Researchers also gathered information on, for example, the number and type of consumer credit products held and how well those surveyed were keeping up with credit commitments. Other questions explored individuals’ behaviour with regard to financial choices. For example, how far those surveyed agreed or disagreed with statements such as ‘I am prepared to spend now and let the future take care of itself’. “We found that consumers who use credit and debt have worse financial literacy than those who save,” says researcher Dr John Gathergood. Moreover, borrowers with poor


financial literacy hold higher shares of high-cost credit (such as home- collected credit, mail order catalogue debt and payday loans) than those with higher literacy. Also, consumers with poor financial literacy are more likely to lack confidence when interpreting credit terms, and to be confused over financial concepts. But crucially the study found that


poor financial literacy is not the only cause of credit repayment problems. Survey evidence from clients of a credit counselling charity showed that consumers with even severe debt repayment problems did quite well on financial literacy tests. “Evidence also suggests that debt repayment problems are associated with over-borrowing due to impulsiveness and poor planning,” Dr Gathergood states. Those with self- control problems are likely to get into debt because they make more use of high credit items such as store cards and payday loans. This group is also more likely to suffer income shocks, credit withdrawals and unforeseen expenses on durables, suggesting that lack of self-control increases exposure to a variety of risks. n


i Contact Dr John Gathergood,


University of Nottingham Email john.gathergood@nottingham.ac.uk Telephone 0115 8566447 ESRC Grant Number RES 061 25 0478


SPRING 2015 SOCIETY NOW 7


PEOPLE BETWEEN 18 and 30 years of age, roughly 20 per cent of Britain’s voting population, have not yet experienced a time in their adult years when British troops were not engaged in conflicts in Iraq or Afghanistan. Based on a representative national sample, researchers explored whether the foreign policy attitudes of the UK’s younger voters differ to older people. When all age groups were asked whether the UK was right to use military force in Afghanistan and Iraq, those who disapproved of UK involvement outnumbered those who approved by more than a two-to-one margin. Younger voters were actually less sour about Britain’s involvement in these conflicts than the old. In terms of the Syrian civil war, 52 per cent of those 30 and under supported Britain enforcing a no-fly zone over Syria, compared to 45 per cent of over 43s. “All told, currently there is widespread scepticism across all age groups concerning Britain engaging peacefully or militarily with other countries,” researcher Professor Thomas Scotto states. “Yet there are important differences in scepticism across different age groups. It remains to be seen whether, as the youngest portion of the electorate grows older, their attitudes will change or they will constitute a distinct cohort that is relatively less sceptical of British humanitarian or even military engagement.” n


i


Contact Professor Thomas J Scotto, University of Essex Email tscott@essex.ac.uk Telephone 01206 873809 ESRC Grant Number RES-061-25-0405


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