Materialism and among low-income debt consumers
Can materialism explain indebtedness among low-income consumers in South Africa? A study suggests the causes may be more complex.
by Glenda Jacobs and Eon Smit


outh Africans’ propensity for consumption and indebtedness receives constant attention from the media, economists and monetary authorities. A concern, for example, is the South African Reserve Bank measurement that the ratio of indebtedness as a portion of household disposable income rose by 44% between 1994 and 2008. Increased domestic spending can be a positive stimulus for economic growth, but not when it happens at the cost of domestic savings. Although the South African government has promoted policies to encourage savings, the rate of domestic savings has declined from 9% of GDP in the 1960s to just more than 4% in the 1990s, and to below 2% in 2005. With the consistent growth in GDP and house1
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hold income in recent years, the decreasing trend in savings implies an increase in consumption as well as an increase in the use of debt to fund consumption. Two factors play a role in the increasing reliance on debt to fund consumption: easier access to sources of credit, and changes in consumer behaviour. A study conducted in South Africa, for example, found an increase in the use of debt by people in the lower-income brackets. Moreover, a study by the Human Sciences Research Council found that debt levels have also been rising faster in the lowerincome category than in other income categories. Official statistics and studies like these suggest that low-income consumers show increasing materialistic tendencies. Monetary authorities have rea-

son to be concerned about the general increased desire to buy. However, while the authorities view consumption levels with unease, businesses have shown a keen interest in the growth in spending in low-income markets. There are therefore also fears about opportunistic forces that may exploit consumerism trends in the lowincome market – driving up debt levels. In order to contribute to this debate, a study done at the University of Stellenbosch Business School (USB) sought to provide more insight into the patterns of debt and materialism among low-income consumers. The notion of materialism Many researchers worldwide have studied materialism as a concept in consumer behaviour. It is often defined as the importance a consumer attaches to possessions and has also been closely associated with consumption, as well as with the propensity of a person to borrow money for consumption. Credit gives individuals the advantage of immediate consumption while only paying in the future. Buying on credit is especially appealing to materialistic consumers, as this allows them to satisfy the desire to own possessions more quickly. Whether one enjoys buying goods, owning them, or showing them off to others – all of these are expressions of materialism. Those who are high on the materialism scale are seen as people who define themselves by what they possess. Those at the low end of the scale tend to lead simpler lives uncluttered by material possessions.

for more than 20 years, was used as a sample frame for the USB study. Because HomeChoice offers goods on credit, it has accumulated a mass of information about its customers. The database with approximately 160 000 active consumers was seen as a valuable resource for studying low-income consumers. Moreover, HomeChoice sells home décor and furnishing products, which are non-essential household items. The decision to purchase such items is more likely to be influenced by materialism than by necessity. Another important aspect of this particular consumer base is that customers have the option to buy on credit. Therefore the HomeChoice consumer base was suitable for exploring the propensity to incur debt for consumption. Choosing one customer base for a study of this nature limits the extent to which findings can be generalised as typical of all low-income consumers in South Africa. Nevertheless, the availability of such a database presented a valuable opportunity to gain more insight into the phenomenon under scrutiny – one that could not be ignored despite the limitations.

Measuring materialism and indebtedness

Globally, there has been a substantial focus on the study of materialism and especially on measuring materialism by way of questionnaires. The instrument used in the USB study was one that had been developed and adapted by several researchers over time: a shortened nine-item version by Richins, as adapted later by Ponchio and Aranha in 2008. Each item is ranked on a scale ranging from 1 (strongly disagree) to 5 (strongly agree). To measure the level of indebtedness, respondents had to provide the number of retail store accounts they hold. To make it easier, they could tick against a list of stores that offer accounts to customers. Blank space was added to allow them to fill in accounts that were not on the list. The nine-item scale follows a valuebased perspective of materialism, which sees materialism as defined by three dimensions: the centrality of acquisition as a prime desire, the pursuit of happiness brought by owning desired items, and the image of success that is reflected in the possession of desired items. The questionnaire is shown in Graphic A below:

2 4 7 3 5 8 1 6 9

Centrality Centrality Centrality Happiness Happiness Happiness Success Success Success

I like spending money on many different things Buying things gives me a lot of pleasure I like a lot of luxury in my life My life would be better if I owned many of the things I don’t have I’d be happier if I could afford to buy more things It bothers me that I can’t afford to buy all the things I like I admire people who own expensive homes, cars and clothes. I like to own things that impress people Some of the most important achievements in life include acquiring material possessions

A database of low-income consumers

The database of HomeChoice (Pty) Ltd, which has been conducting business in the low-income retail market

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The questionnaire was slightly simplified, but kept in English, since HomeChoice frequently conducts mailed market surveys among its customers in the English language. Before the questionnaire was sent out, however, it was pretested with a group of typical HomeChoice customers. This step ensured that the questions were clear and easily understood by the target group. The questionnaire was printed in the HomeChoice Club magazine, which is mailed to HomeChoice customers on a bi-monthly basis. The survey generated 217 responses from people reporting an income below R7 000 per month, which was the targeted maximum income level.

Results of the analyses
Materialism scores The first part of the investigation focused on the materialism scale. The analysis started by calculating the average scores per item as well as the total materialism score. The findings are shown in Graphic B. In interpreting the scores, it must be kept in mind that the neutral score is three; scores above three reflect relatively higher levels of materialism on a particular item; and scores below three reflect lower materialism levels. Similarly, for the total materialism score, values above 27 show relatively higher levels of materialism.

1 2 3 4 5 6 7 8 9



Average score
3,06 3,53 3,47 3,75 3,94 2,47 3,12 3,62 2,97

7 4 5 2 1 9 6 3 8

I admire people who own expensive Success homes, cars and clothes I like spending money on many differ- Centrality ent things My life would be better if I owned Happiness many of the things I don’t have Buying things gives me a lot of plea- Centrality sure I’d be happier if I could afford to buy Happiness more things I like to own things that impress peo- Success ple I like a lot of luxury in my life Centrality It bothers me that I can’t afford to buy Happiness all the things I like Some of the most important achieve- Success ments in life include acquiring material possessions Total materialism score

‘based on the results of this sample, the over-50 age group is less materialistic than the 25-34 age group’
From the analysis it can be deduced that the population sampled reflects moderately high levels of materialism. This is particularly evident in the total materialism score of 29,93. The three highest scoring items were: I’d be happier if I could afford to buy more things (3,94); Buying things gives me a lot of pleasure (3,75); and It bothers me that I can’t afford to buy all the things I like (3,62). The higher scoring items were in the happiness and the centrality dimensions. The three lowest scoring items were all in the success dimension. The scoring per dimension is illustrated in the next analysis.


Green shows the top-ranked items; grey shows the lowest-ranked items.


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Graphic C shows the average scores of the total sample of 217 on the three dimensions of the materialism scale. As each dimension is measured by three items, the maximum possible score is 15 per dimension. The neutral score is nine. The results indicate that the image of success attached to owning possessions is not as important as the happiness brought by owning possessions and the enjoyment of the action of buying. This result differs from previous studies done in Asia, in which success was the strongest dimension, but it is similar to studies done in Russia and Brazil. According to the results, the population sampled is more likely to view possessions and purchases as necessary for own well-being, but less likely to buy items to impress other people. GRAPHIC C: SCORES OF MATERIALISM DIMENSIONS
Success Centrality Happiness

group. The other differences are not statistically significant, and one cannot make a similar claim. GRAPHIC D: COMPARISON BY AGE GROUP
Age Group
Between 22 and 24 Between 25 and 34 Between 35 and 49 Over 50

10 69 91 47

27,50 31,70 30,53 26,68

Green indicates statistical significance in the difference between categories.

Graphics E and F show the differences between materialism on the one hand and gender and income levels respectively on the other. The differences are relatively small, and none of them are statistically significant. GRAPHIC E: COMPARISON BY GENDER
Male Female

8,49 10,40 11,03

44 173

30,55 29,77

The data were subsequently analysed to see whether there are differences between age groups, gender, and income levels. Graphic D shows that there are distinct differences between age groups and materialism scores. Especially the age group over 50 years shows relatively lower materialism tendencies. It was, however, important to examine whether these differences resulted by chance or whether they reflected statistically significant differences. Further statistical tests revealed that the difference between age groups 25-34 and over 50 is statistically significant. It can therefore be stated that, based on the results of this sample, the over-50 age group is less materialistic than the 25-34 age

Income level
R500 to R2 000 R2 001 to R 3 000 R3 001 to R 4 000 R4 001 to R7 000

86 39 40 52

29,31 30,51 30,63 29,96

Correlation between materialism and indebtedness The next part of the analysis was done to test the relationship between the level of indebtedness on the one hand, and materialism and the demographic

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Variable tested against indebtedness
Materialism Income level Gender Age group

Correlation coefficient
0,08 0,13 0,16 -0,19

0,2164 0,049 0,016 0,005

Very low correlation and statistically insignificant Low correlation but statistically significant Low correlation but statistically significant Low negative correlation but statistically significant

A p-value of 0,05 or less implies statistical significance

variables on the other. The level of indebtedness was measured by the number of store accounts people held. It was found that the range was between one and eight accounts, but that the majority of people held four accounts or fewer. The average was 2,74 accounts. An analysis to determine the correlation between the number of accounts (level of indebtedness) and materialism as well as the measured demographic variables is summarised in Graphic G (above). The analysis shows that there is very little relationship between materialism and the level of indebtedness. Indebtedness is rather related to demographic factors such as income, gender and age. Although these relationships are small, they are statistically significant.

The relationship between the four variables and indebtedness was further tested by way of a regression analysis. The resulting regression model was rather weak, with a relatively small coefficient of determination of only 8,03%. Moreover, only the variables age and gender showed a statistically significant fit in the regression model built to explain indebtedness. Materialism and income level did not play a statistically significant role in the regression model.

A need for more research

What this study shows is that our understanding of indebtedness among low-income consumers is rather limited. Although the study pointed out that low-income consumers show rela-

tively high materialism levels, materialism scores did not show a relationship with indebtedness scores in this particular sample group. The two variables that did show a significant relationship with indebtedness, namely age group and gender, did so in a rather soft way. Together they could explain only 8% of the variability in the levels of indebtedness of the respondents. Since there is a growing interest among policy-makers to increase economic participation by the lower-income levels in South Africa, and likewise among businesses to tap into the potentially huge market at the base of the economic pyramid, a better understanding of the social risk involved is necessary. More research is required to ensure that this market is approached in an ethical and responsible way.

This article is based on Glenda Jackson’s research report titled Materialism and indebtedness of low-income consumers: A survey based on South Africa’s leading catalogue retailer for her Master’s in Development Finance, which she obtained from the University of Stellenbosch Business School (USB) in March 2010. Her study was supervised by Prof Eon Smit.
Glenda Jackson Eon Smit

An article by these two authors subsequently published in the South African Journal of Business Management, 41(4), December 2010, under the title Materialism and indebtedness of low-income consumers: Evidence from South Africa’s largest credit-granting catalogue retailer, received the award for the best article from student research at the USB’s March 2011 award ceremony.


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