Credit Card Indebtedness and Psychological Well‐Being Over Time: Empirical Evidence from a Household Survey

While a number of studies have investigated the relationship between debt and psychological well‐being, none so far has explored if and how this relationship evolves over time. We seek to fill this gap in the literature by empirically analyzing the impact of household credit card debt on debt stress. Using cross‐sectional data collected by The Ohio State University's Consumer Finance Monthly survey between August 2008 and December 2010, we construct a debt stress index and categorize households into three groups based on the length of credit card indebtedness. Our empirical results provide statistical evidence of time‐varying impacts of credit card debt on stress levels. Specifically, we find that debt stress for short‐run debtors is more than twice that of long‐run debtors. The results are robust across a range of econometric specifications.     

External Debt,Labour Productivity Growth and Convergence: Evidence from Sub‐Saharan Africa

Sub‐Saharan Africa (SSA) has long suffered from lagging productivity and excessive levels of indebtedness. Using both parametric and non‐parametric techniques, this paper examines the impact of external debt on labour productivity growth and convergence across SSA economies over the period 1970–2010. The results indicate the presence of debt‐overhang effects, regardless of model and sample specification. Debt reduction through the Heavily Indebted Poor Countries and Multilateral Debt Relief initiatives enhanced growth but was not successful in offsetting the debt‐overhang effects. Moreover, excessive levels of external debt were responsible for divergence in output per worker over the early 1990s. Although this trend was reversed over the 2000s, reduction in debt through the debt relief initiatives seems to have been insufficient in helping heavily indebted countries in SSA catch up with the labour productivity levels of the best‐performing economies in the region.     

Determinants of indebtedness among young adults: Impacts of lender guidelines,explicit information and financial (over)confidence

For most people, borrowing money is a necessary aspect of life in the 21st century. Wisely handled, loans give consumers access to consumption too expensive for most individuals to purchase with cash, such as homes and cars. However, history shows that taking on too much debt can be detrimental for the individual consumer as well as society as a whole. In this paper, we investigate determinants of over‐indebtedness among young adults. We perform three studies in a setting focused on buying and borrowing money for a home. We show that, compared with an overall mortgage amount, explicit information about monthly payments reduces the tendency to take on too much debt (Study 1), that the amount borrowed depends on standards regarding the loan amount communicated through guidelines from the lender (Study 2), and that borrowers who are overconfident about their financial abilities tend to borrow more than less confident individuals (Study 3). These determinants and their policy implications are discussed.     

Consumer perception of packaging: An eye‐tracking study of gluten‐free cookies

The growing interest in gluten‐free products makes it crucial to understand the mechanism of consumers' perception of gluten‐free claims. Due to the limited research measuring the influence of the type (verbal/nonverbal), number and location of gluten‐free statements on product labels on visual attention and consumers' purchase decisions, the main aim of this research was to evaluate the perception of gluten‐free claims and the Crossed Grain symbol on cookie packages of both consumers who are on a gluten‐free diet and those who are not. To that end, a questionnaire survey (600 respondents) and an eye‐tracking study (67 respondents) were carried out. The results showed that the respondents are aware of the basic rules of gluten‐free products' labelling, but 32% of those on the diet claimed that the products were not labelled properly. The analysis proved (p < .05) the significant relation between the number of gluten‐free claims and consumers' purchase intention. The respondents paid more attention to verbal gluten‐free claims than to nonverbal ones on packaging (p < .05). In the case of the Crossed Grain symbol, addition of verbal statement strengthened the information and decreased the respondents' level of uncertainty about a given product, which is important, especially for people newly adopting the diet. No difference in the visual attention to gluten‐free statements between the followers and non‐followers of the diet was found (p > .05), which allowed us to conclude that the perception of gluten‐free claims is an automatic process. These results suggest that designing product labels by considering the information architecture concerning gluten may help strengthen consumers' attitudes towards gluten‐free products and impact buying behaviour.     

A multivariate study of over‐indebtedness' causes and consequences

This paper proposes a comprehensive explanatory model to explain both causes and consequences of over‐indebtedness. It presents as causes some borrower aspects, such as propensity to indebtedness and low financial literacy. Other causes are borrower circumstances: adverse external shocks, borrower internal problems and financial institutions' pressure. The model incorporates consequences on the borrower, the lender and the society. The model has been tested with a survey filled in by experts and over‐indebted individuals. Results have been analysed using multivariate techniques, including canonical correlations. There are differences in the opinions of experts and individuals: the latter blame external shocks or financial institutions' pressure, while the former find relevant factors the financial illiteracy or the tendency to imitate others. Experts and individuals agree on the consequences: poverty growth in the society and declining borrower's welfare. The paper concludes with the need to improve financial literacy, especially in the risks involved in over‐indebtedness.     

The Effect of Government Spending on the Debt‐to‐GDP Ratio: Some Keynesian Arithmetic

According to the standard approach to the issue of public debt sustainability, fiscal austerity is the route that many countries must currently follow to reduce their debt‐to‐GDP ratios back to sustainable paths. We challenge this conventional wisdom and argue that, below full employment, an increase in government spending may paradoxically reduce the debt‐to‐GDP ratio. This claim is particularly relevant today because with Central Bank interest rates near zero there is no alternative to fiscal policy, and the only argument against increasing government expenditure as a way to fight unemployment is its supposed negative effect on the state of public finances.     

Over-Indebtedness in the Finnish Consumer Society

The incurring of debts continues to be a major problem in European economies despite the legislative and other preventive policies introduced over the past 10 years. This article discusses the problem of over-indebtedness in the Finnish consumer society. The article focuses on identifying the environmental and household factors promoting indebtedness and reviews the measurements of over-indebtedness. At the end of the article, a few policy instruments to tackle, or even prevent, over-indebtedness are provided. As debt problems are diverse and complex, the focus is to address the debt problem itself, identify its causes and search for tools for solving it. In addition, constructive talk about the indications of the problem and preventive mechanisms is also of essence.     

Parental financial support: A safety net for young adults with debt problems

Parental financial support benefits young adults in societies with decreasing welfare‐state support and a pattern of early home‐leaving. This article focuses on the association between young adults’ debt problems and parental financial support: the extent to which indebted young adults receive financial help from their parents. We also investigate the extent to which specific benefits are associated with debt problems or parental financial support. The data were gathered in an online survey conducted among 18‐to‐35‐year‐old Finns (n = 1,019). The results revealed, first, that many parents safeguard their indebted adult children’s lives by means of financial support and second, that heavy cash‐welfare‐benefit users are particularly likely to receive parental financial support. Our analysis also revealed that the prevalence of debt problems as well as of parental financial support were especially high among those who had received social assistance, sickness benefit or labour‐market subsidy within the previous 12 months. In a society open to new social risks as well as to debt problems, young people who lack financial support from their parents have a rockier transition to adulthood than those who receive support.     

Consumer debt attitudes: The role of gender,debt knowledge and skills

The link between financial attitudes and consumer financial market behaviour is well documented. However, little is known about the role of financial knowledge and skills—the main components of the financial literacy construct—in shaping debt attitudes. This link is especially absent from the gender perspective. This study focuses on consumer debt literacy and debt attitudes. A representative sample of adult Poles (N = 1,004) was participated in a computer‐assisted telephone interview. Latent class analysis was employed to reveal their debt attitudes, and subsequently, links between debt literacy and debt attitudes were studied with multinomial regression models. The results show that respondents in Poland can be grouped into five classes exhibiting different attitude profiles. The structure of debt attitudes is complex and differs from a simple unidimensional pro‐debt/ anti‐debt construct. Although this study did not find significant gender differences either in the conceptualization of debt attitudes or in their drivers, the results showed that in all but one class, consumer attitudes are strongly linked to either debt knowledge or debt skills or to both. Debt skills were revealed to be a particularly strong predictor of consumer debt attitudes.     

Evaluation of a maltodextrin gel as a partial replacement for fat in a high‐ratio white‐layer cake

The performance of maltodextrin gel as a replacement (25%, 50%, 75% and 100%) for shortening along with sucrose and high fructose corn syrup‐90 (HFCS‐90), adjusted for sweetness in each treatment, was evaluated in a high‐ratio white‐layer cake formulation. Two controls were used as a reference to fat‐replaced cakes: control A (100% fat and 100% sucrose) and control B (100% fat with 50% sucrose/50% HFCS‐90), which closely matched the sugar system of the fat‐replaced cakes. Volume of cakes showed that treatment F (100% fat‐substituted) was significantly (P < 0.05) different from the other treatments. Crust and crumb L‐ and b‐values indicated that control B produced a dark crust (P < 0.05) with a light crumb (P < 0.05) whereas treatment E (75% fat substituted) produced a light crust (P < 0.05) and treatment F a darker crumb (P < 0.05) with a significantly (P < 0.05) higher moisture content. Degree of staling significantly (P < 0.05) increased over time for all treatments. Sensory results indicated that treatment F produced a significantly (P < 0.05) moister, less adhesive and cohesive cake. Tenderness and sweetness scores indicated that treatments E and F were significantly (P < 0.05) tougher and less sweet, respectively, when compared with the other treatments. Results from both the physical and sensory analyses indicated that the combination of maltodextrin gel up to a 75% reduction for shortening and sucrose/HFCS‐90 resulted in satisfactory cakes.     

Debt problems,home‐leaving,and boomeranging: A register‐based perspective on economic consequences of moving away from parental home

This article analyses the development of financial problems after leaving one's parental home, and considers how financial problems are associated with likelihood of boomeranging (i.e., adult children returning to parental home). The 9‐year follow‐up study focused on a nationally representative sample of Finnish young people between the ages of 15 and 25 who moved out from their parental home between 2006 and 2009 (n = 9,196). The measure of debt problems was based on monthly data on debt enforcement, a legal matter which may bring serious consequences for the debtors. The primary within‐individual, longitudinal analyses showed that debt problems increased directly after leaving parental home. Education and family background were significant predictors of debt problems in the four years after leaving parental home. Early leavers had significantly more debt problems than later leavers. Debt problems were associated with a higher likelihood of moving back to parental home. The results imply that it is important to support economic decision‐making during early adulthood.     

Pre‐purchase and post‐purchase satisfaction and fashion involvement of female tennis wear consumers

This study examined the relationship among pre‐purchase and post‐purchase satisfaction and fashion involvement of women who participated in tennis. As women's activities in sports, including tennis, are growing, it is necessary to investigate their clothing needs in order to meet consumers’ needs. A final sample consisted of 124 women who attended a Cortec United States Tennis Association Women's Pro Tournament. The questionnaires were personally distributed and collected during the tournament. The theoretical base for this study was the Engel, Blackwell, and Miniard model on consumer decision making. There was a positive significant relationship between pre‐purchase satisfaction and post‐purchase satisfaction (P < 0.01). There was a positive significant relationship between pre‐purchase satisfaction and fashion involvement (P < 0.001). Also, there was a positive significant relationship between post‐purchase satisfaction and fashion involvement (P < 0.001). Comfort was identified as the most important clothing attribute and fit the second most important for women to achieve satisfaction before and after purchasing tennis apparel. Seventy‐two percent of the women indicated the need for improved fit of tennis wear. Women of all ages reported garment length as a problem for each garment type. Two major reasons for not purchasing tennis clothing were high prices and inappropriate sizes.     

Consumer food safety perceptions and self‐reported practices in Greece

A substantial proportion of foodborne illness is associated with food prepared in households. The primary understanding of how foods are handled in private homes comes mostly from questionnaire based studies and direct observation. The aim of this survey was to examine consumers' perceptions and knowledge of safe food handling practices in Greece. More specifically, their attitudes, opinions and self‐reported practices were studied. Data were collected from a total of 399 consumers living in Greece by the use of a self‐administered on‐line survey. The questionnaire consisted of four positive and five negative statements according to the 5‐point Likert scale, which grouped into three constructions using principal component analysis in order to investigate food safety perceptions of consumers. Furthermore, the survey included 11 demographic questions, two close‐ended questions (type yes/no) and four questions that are related to self‐reported food‐handling practices. The results showed that the most commonly known bacterium causing food‐related illness according to respondents' knowledge is Salmonella (99.7%), followed by Escherichia coli (73.9%) and Listeria (58.4%). The overall consumers' score concerning food safety was 32.8 ± 5.37 (full score was 45). No significant differences to the mean score of food safety knowledge were found according to gender, age or the incidence of foodborne illness over the past 12 months. Knowledge and awareness of safe food handling practices was enhanced at higher education levels, while homemakers were found to have deficiencies at this level. Information obtained from consumers can be used to shape educational programs and determine where food safety educational efforts would be most effective and the needed content of the messages.     

Milk yields,physico‐chemical properties and composition of milk from indigenous Malawi goats and their Saanen half‐breds

A study to compare milk yield, some physico‐chemical properties and the chemical composition of milk from 23 indigenous Malawi goats and 10 Malawi local × Saanen crosses was carried out from January to March 2000. The results showed that the average milk yield from the crosses (102.0 ± 11.21 kg) was higher (P < 0.01) than that from the indigenous goats (37.1 ± 4.79 kg). However, the pH and specific gravity of both milk samples did not differ significantly from each other. The latter was attributed to the fat and total solids contents, which did not differ significantly in the two milk samples. Although the crude protein content was not significantly different, lactose and minerals, namely calcium, sodium, magnesium, potassium and chloride, were higher (P < 0.01) in milk from the crosses than in milk from the indigenous goat. The results have shown that the levels of nutrients in goat milk are high, and this is indicative of its potential to improve the diets of rural Malawians. Also, as smallholder farmers sell raw unheated milk to the processing plants, such milk should not be kept for> 33 h in the cool dry season and for not> 20 h in the hot dry season. Farmers can also adopt a charcoal cooler to save the milk for an even longer time than they can at room temperature. In this case, the raw milk can only be stored for not> 20 h in the cool dry season and not> 16 h in the hot dry season.     

A Vicious Cycle of Manias,Crises and Asymmetric Policy Responses – An Overinvestment View

Over the past three decades, we find that asymmetric policy responses heavily contributed to manias and bursting bubbles that eventually trapped the major industrial economies into near zero short‐term interest rates with rapidly rising public indebtedness. The article uses the endogenous business cycle theories of Wicksell, Mises, Schumpeter, Hayek and Minsky to show how ostensible counter‐cyclical monetary policies are asymmetric, as central banks are less willing to raise interest rates in booms than cut them when bubbles collapse. After interest rates have fallen towards zero, fiscal policy is called on which sooner or later becomes bounded by extraordinary debt to GDP ratios. Central banks hesitate to raise interest rates even in the face of a partial economic recovery because the cost of public debt service would become prohibitive. The economies then languish at very low interest rates that encourage low productivity real investments and a continual threat of bubbles in asset and raw material markets. This makes them unable to deal with further macroeconomic shocks.     

Funding development infrastructure without leverage: A risk‐sharing alternative using innovative sukuk structures

Muslim countries of the developing world suffer indebtedness resulting mostly from funding development infrastructure. Faced with a dire need for development infrastructure but with inadequate resources to fund them domestically, these governments often resort to foreign borrowing. As neither foreign banks nor international debt markets would allow for the debt to be in home currency, the funding is invariably denominated in foreign currency. For the borrowing country, in addition to currency exposure such borrowing increases the country's leverage and economic vulnerability. As these countries typically have a narrow economic base with heavy reliance on commodity exports, they are susceptible to the vagaries of commodity price fluctuation. Leverage increases the amplitude of the economy's fluctuation, resulting if not in outright crisis, then, at least in financial distress and depreciating home currency. As a result, when the foreign currency funded project comes on stream, it is burdened with huge accumulated debt which in many cases makes the project unmanageable without further government help through subsidy of operating costs. This further stresses already stretched government budgets and perpetuates indebtedness. This cycle of borrowing, leverage and vulnerability can be broken by innovative use of sukuk. The problem with debt financing is that the servicing requirements are independent of the underlying project's risk or cash flows. This paper presents two sukuk structures based on the risk sharing principles of Islamic finance. Sukuk that have returns linked to the nation's gross domestic product growth if the funded project is non‐revenue generating and linked to earnings of the project if it is revenue generating can avoid the problems above. The pay‐off profile, estimated cost of funds and returns to investors of these sukuk are discussed. When designed in small denomination, such sukuk can enhance financial inclusion, help build domestic capital markets and enable the financing of development without stressing government budgets.     

Continuous‐time mean–variance portfolio selection: A reinforcement learning framework

We approach the continuous‐time mean–variance portfolio selection with reinforcement learning (RL). The problem is to achieve the best trade‐off between exploration and exploitation, and is formulated as an entropy‐regularized, relaxed stochastic control problem. We prove that the optimal feedback policy for this problem must be Gaussian, with time‐decaying variance. We then prove a policy improvement theorem, based on which we devise an implementable RL algorithm. We find that our algorithm and its variant outperform both traditional and deep neural network based algorithms in our simulation and empirical studies.     

Educating for self‐interest or ‐transcendence? An empirical approach to investigating the role of moral competencies in opportunity recognition for sustainable development

Entrepreneurship education with a focus on sustainable development primarily teaches students to develop a profit‐driven mentality. As sustainable development is a value‐oriented and normative concept, the role of individual ethical norms and values in entrepreneurial processes has been receiving increased attention. Therefore, this study addresses the role of moral competence in the process of idea generation for sustainable development. A mixed method design was developed in which would‐be entrepreneurs were subjected to a questionnaire (n = 398) and to real‐life decision‐making processes in a case assignment (n = 96). The results provide stepping stones for implementing (moral) competencies in entrepreneurship education as a possible avenue to move away from a sole focus on a profit‐driven mentality.     

Robust consumption‐investment problem under CRRA and CARA utilities with time‐varying confidence sets

We consider a robust consumption‐investment problem under constant relative risk aversion and constant absolute risk aversion utilities. The time‐varying confidence sets are specified by Θ, a correspondence from [0, T] to the space of the Lévy triplets, and describe a priori drift, volatility, and jump information. For each possible measure, the log‐price processes of stocks are semimartingales, and the triplet of their differential characteristics is almost surely a measurable selector from the correspondence Θ. By proposing and investigating the global kernel, an optimal policy and a worst‐case measure are generated from a saddle point of the global kernel, and they constitute a saddle point of the objective function.     

Monetary Union Viability: A Criterion Proposal

We propose a model that represents the dynamic behaviour of a monetary union comprising two countries whose natural interest rates are initially unequal. This initial disparity and the subsequent application of a common monetary policy generate different national inflation rates and lead to losses of competitiveness, foreign deficits, and the indebtedness of one country with respect to the other. We propose as a viability criterion for the modelled monetary union a combination of non‐explosive foreign debt and the ability of the central bank to neutralize the contracting effects of taking on additional debt to avoid falling into a liquidity trap.