Brandon Burns P.

Begley Persuasion (COMM 4) September 9, 2013

Research Question:

Do People Who Use Debit Cards More Than Cash Engage in More Impulse Buying?
I chose this research question because I am strongly against debit
card usage and because I wanted to see if there was a correlation between impulse spending and debit cards.

Literature Review:
Key Terms:
More Than Cash An individual who spends with a debit card for the majority of their purchases rather than with physical money. Impulse Spending Impulsively spending money with little thought, usually in small purchases. E.g. small purchases, candy, magazines, etc. Cash Dollar bills and cents as opposed to digital money.

Credible Info:

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I was able to find many studies conducted on this subject. The studies
look at debt as well as impulse and spending habits and I have listed them here: Debit card usage: an examination of its impact on household debt; Jinkook Lee, Ph.D.a, Fahzy Abdul-Rahman, M.S.a, Hyungsoo Kim, Ph.D.a (http://www2.stetson.edu/fsr/abstracts/vol_16_num1_p73.pdf) How Credit Card Payments Increase Unhealthy Food Purchases: Visceral Regulation of Vices; Manoj Thomas, Kalpesh Kaushik Desai, and Satheeshkumar Seenivasan (http://www.jstor.org/stable/10.1086/657331) Shopping without Pain: Compulsive buying and the effects of credit card availability in Europe and the Far East; Hui-Yi Loa, Nigel Harvey (http://www.sciencedirect.com/science/article/pii/S016748701000136 4) Credit and Debit Card Usage and Cash Flow Management ;African Research Review (http://www.ajol.info/index.php/afrrev/article/view/83604/73632)

Evaluation of Credible Info:

In How Credit Card Payments Increase Unhealthy Food Purchases:
Visceral Regulation of Vices, there is a paragraph called Pain of Paying in Cash. The paragraph covers an experiment where some participants were given a $50 bill while others were given a $50 scrip certificatea certificate whose value is recognized by the payer and payee. Participants then responded to a simulated shopping study. [] participants spent more when they were given scrip than when they were given an equivalent amount in cash.

The experiment that proves that paying in cash elicits greater pain
than paying by other modes of payment even when the modes are
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normatively equivalent (Thomas, Desai, and Seenivasan). In other words, when paying by debit card, it causes less pain which makes it easier to buy impulsively, which results in increased spending.

Additionally, African Research Review states that cardholders

indicated above average increase in their consumption level (5.7%) meaning increase in expenditure and decrease in saving as result of the use of the cards which further supports my hypothesis that debit cards increase spending and impulse spending.

Opposing Views:
Contrary to the research previously mentioned, Jinkook Lee, Fahzy
Abdul-Rahman, and Hyungsoo Kim report at the top of page 85 of their report state that As consumers realize that debit card purchases will almost instantly reduce the amount of money in their bank account(s), they become more prudent in spending. In other words, the thought of immediate payment via a debit card discourages unnecessary or impulse spending.

They suggest that using your debit card will cause you to realize your
reckless or impulse spending and discourage you from spending recklessly when you lose money through your debit card.

Further Research:
Research on the subject of debit cards, credit cards, and impulse
spending is available, but limited. It would definitely be interesting to see who is in debt more and who makes more purchases during the week between cash and debit spenders. To further prove that debit users spend more impulsively, there should be a focus on what is purchased because some items are purchased on impulse more than other such as snacks,
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candy, drinks, etc. Some machines are designed specifically for impulse purchases such as vending machines and candy dispensers, and some of these are card accessible; a study on the percentage of cash to debit spending on these machines would be very good for an argument either for or against debit card impulsiveness.

Methods:
For my research method, I chose a simple and effective Likert-type
hybrid survey that I chose mostly for its simplicity. It consists of 12 bipolar questions and focuses spending habits concerning debit cards. Half the questions are on a 4-point Strongly Agree to Strongly Disagree scale and the others are linear questions comprised of number based answers. In hindsight, after taking the survey myself, I realized that my survey was somewhat flawed, but the results still valid.

The focus of the survey was to categorize the volunteers into divisions
and to then determine the volunteers impulse buying habits; specifically how often they bought on impulse. To categorize the volunteers for cross examination, the survey included various categorical questions such as age, socioeconomically class, and gender. In hindsight, I realize that dividing the volunteers into socioeconomic class was not useful for this study because it is too much of a subjective concept; a better question would have been How much money do your earn in a week? or something along those lines to find how much money the volunteers make. For better research, it would be helpful to have information such as amounts spent and exactly how often they impulse bought, but due to privacy concerns and unavailability of data, these questions were omitted.

To find volunteers to take the survey, I visited three different locations

and asked people to take my survey in person. To get a good mix of people, I visited the Fashion Fair Mall, Manchester Mall, and River Park in Fresno.
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While at these locations, I surveyed many different kinds of people and even though I was only able to complete 30 surveys within my limited timeframe, my survey results represent the people I surveyed very well and 50 completed surveys are unnecessary. I spent approximately 1-1/2 hours at each location and I was generally well received by the volunteers.

Impulsiveness Averages
2.88 2.83

2.75 100 %

2.61 Average Impulsiveness Male Impulse

2.00

60 %

Female Impulse

55 %

Low/Mid Class Impulse Middle Class Impulse Upper/Mid Class Impulse

44 %

33 %

40 %

Uses Debit Card Uses Debit Card Uses Debit Card Uses Debit Card for Most More Less Least

Overall

Figure 5.1 Impulsiveness Averages Graph

- Figures calculated from subjective questions, for annotative use only

Results:
In total, I obtained 30 surveys from my volunteers; the process was
long, but worth the effort. I surveyed volunteers from various ethnicities, ages, and locations and I was able to get interesting results. The survey
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26 % 19 %

50 % 50 % 33 % 33 % 33 %

49 % 51 % 22 %

48 % 52 %

47 % 53 %

47 % 53 %

results support my hypothesis that debit card users are more impulsive, even if the difference between the groups is small. 43 % 57 %
Males Females

My survey suggests that those

who use debit cards more than cash are more impulsive spenders while cash spenders are more deliberate and less compulsive, just as I had

Figure 6.1 Male/Female Chart

thought. The focus of my research is that debit cards users spend more impulsively, so below in Figure 5.1, I have included a chart of various classifications and percent ages gathered from averaged survey answer values. The four groups represented here on this chart are volunteers who responded to the statement I use my debit card for most of my purchases with Strongly Agree, Somewhat Agree, Somewhat Disagree, and Strongly Disagree which were then given values and averaged based on how they answered to the question I often buy things on impulse.

The blue and pink columns represent the males and females that
responded in their respective while the green, red, and brown columns represent socioeconomic class. It is important to note that the question that gave me the figures for the socioeconomic part of the chart was far too subjective to be conclusive. The figures are included to show how the respondents answered and the results of those questions are not conclusive. Not included on the chart, but still relative, I found that younger people are generally more impulsive, possibly due to a lack of experience with money. My data shows that females are slightly more impulsive than males and that debit card users are more impulsive than cash users, which, according to the respondents, proves the research question Do People Who Use Debit Cards More Than Cash Engage in More Impulse Buying? true. Although my data does prove my research question true, my survey does have some

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fundamental flaws. After completing my own survey, I found that some of my questions are very subjective and it may have been susceptible to social desirability bias and acquiescence bias, despite my best efforts to avoid them, making my results less reliable (this does not change the answer to my research question however).
57%

3% 7% 33%

Lower/Middle Class Middle Class Middle/Upper Class Prefer Not To Answer

Figure 7.1 Socioeconomic Chart

The percentage of types of people I

was able to survey were well varied. I covered gender and age among other categories so that I could examine impulsive behavior over various types of people. Below I have a few pie graphs that visually describe the types of people surveyed. Figure 6.1 shows the percent of males to females surveyed. In percentage, it reads 43% males surveyed and 57% females surveyed. The actual number

- Figures calculated from subjective questions, for

annotative use only

20% 37% 23% 20%

19 & Under 20 - 29 30 - 39 40 or Over

Figure 7.2 Age Chart

values for each are 17 females and 13 males surveyed. The reason for the slightly varying numbers is possibly due to the approachability of women versus men as men can be more intimidating than women. In the Figure 7.1, the percentage of each socioeconomic class is shown. Again, this question was too subjective, so this is chart is for the results of the subjective question only and should not be considered conclusive. The vast majority of respondents were in the middle class. I am fairly certain that this was the most chosen answer not because of their actual class, but because it was the easiest answer to pick because it lies in the middle. Only 1 respondent chose not to disclose his status (the portion marked in grey) and only 2 reported
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as upper/middle class (marked in light green); they are the minority on this pie graph and the middle class and lower/middle class slices are the majority. Finally, on the third pie graph on this page, Figure 7.2, we have the ages of the participants surveyed. The majority of those I surveyed were older or middle-aged because most of the younger people would not take my survey and were often rude when asked.

Although the results are somewhat inconsistent, I am still able to draw

on a few key data points. From my study, I see that females, on average, are marginally more impulsive than men; and, on average, younger adults tend to spend more impulsively, and overall, debit card users do spend more than cash users.

I am surprisingly content with the muddled survey results. Some of

my data points, such as young adults spend more than older adults, is congruent with my hypothesis, but other data points such as younger adults being less impulsive buyers, is completely the opposite of what I expected. My survey was a mixed bag of results that needs more exploration, but I can say, with some certainty, that debit card users are more impulsive buyers than non-debit users (see Figure 5.1). My survey was somewhat successful and it does support my research question.

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Citations:
Manoj Thomas, Kalpesh Kaushik Desai, and Satheeshkumar Seenivasan How Credit Card Payments Increase Unhealthy Food Purchases: Visceral Regulation of Vices Journal of Consumer Research, Vol. 38, No. 1 (June 2011), pp. 126-139 Published by: The University of Chicago Press Article DOI: 10.1086/657331 Article Stable URL: http://www.jstor.org/stable/10.1086/657331 Hui-Yi Lo, Nigel Harvey Shopping without pain: Compulsive buying and the effects of credit card availability in Europe and the Far East Journal of Economic Psychology, Volume 32, Issue 1, February 2011, Pages 7992 http://dx.doi.org/10.1016/j.joep.2010.12.002 Simiyu, Justo Simiyu; Momanyi, Gedion; Naibei, Kiprotich Isaac; Odondo, Alphonce Juma Credit and Debit Card Usage and Cash Flow Management An International Multidisciplinary Journal, Ethiopia Vol. 6 (4), Serial No. 27, October, 2012 ISSN 1994-9057 (Print) ISSN 2070--0083 (Online) DOI: http://dx.doi.org/10.4314/afrrev.v6i4.11 Jinkook Lee, Fahzy Abdul-Rahman, Hyungsoo Kim Debit card usage: an examination of its impact on household debt Financial Services Review 16 (2007) 7387 Ohio State University, Columbus, OH 43210, USA University of Kentucky, Lexington, KY 40506-0054, USA http://www2.stetson.edu/fsr/abstracts/vol_16_num1_p73. pdf

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