Indicators of personal financial debt using a multi-disciplinary behavioral model

Financial indebtedness has risen quite significantly during the 1990s and early 2000s. This research effort developed a multi-disciplinary model of consumer indebtedness used for early identification of US Air Force enlisted members most at risk for developing indebtedness. A survey was designed and administered to first term enlisted Air Force personnel. A multi-faceted behavioral model of indebtedness was specified including demographic characteristics, institutional characteristics of the military, economic and financial information, situational information about the events occurring in an individuals life, and psychological personality traits with respect to money attitudes, beliefs and behavior. The product of the analysis was a model of consumer indebtedness using personal unsecured debt versus no debt. The estimated logit model exhibited strong predictive capabilities, as well as high percentages for sensitivity and selectivity of prediction. In addition, likelihood ratio tests strongly supported the thesis that indebtedness was a multi-faceted behavior which is comprised of demographic/institutional, financial, economic, psychological, and situational aspects, each critically important to the overall explanation of indebtedness behavior.