#BuyNowPayL8r -The Influence of Social Media on Consumer Credit Behavior

Abstract: Amplified by the introduction of the smartphone, which is now integrated in nearly every aspect of daily life, consumer credit-financed purchases are more accessible than ever and can now be spontaneously made in a matter of minutes. The aim of this thesis is to investigate the relationship between various financial decisions and time spent on social media (SMT). We theorize unprecedented exposure to the consumption and carefully managed narrative of others displayed on social media systematically make social comparisons unfavourable, implicitly causing young adults to overspend using consumer credit. Based on our hypothesized narrative, we stepwise explore the predictive power of SMT on (1) attitudes towards financing non-durable goods by instalment, (2) instalment lending, and (3) payment troubles. Through a web survey we collect individual measures of SMT, relative preferences, time preferences and various other variables we conjecture affect people’s economic attitudes and decisions in this context, such as feelings of inferiority as a prerequisite for envy. Our results show that SMT has a significant, positive effect on attitudes towards financing consumption of non-durable goods but does not further predict actual instalment lending or payment troubles. Also, individual time preferences are significant predictors of both attitudes towards- and realized instalment lending, whereas inferiority is positively significant for both instalment lending and payment troubles. Though, we refrain from drawing any strong inferential conclusions from these findings as clarified in the paper.