The Systemic Nature of Personal Debt: A Critical Realist Approach to Analyses and Solutions

Date
2016-06
Authors
Verhelst, Brianna Dawn
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Faculty of Graduate Studies and Research, University of Regina
Abstract

Keywords: Personal debt, overindebtedness, financial system, financial literacy, critical realism, critical theory, structures, rational choice, financial regulation, social policy. Despite widespread concern, the causes and effects of the 2008 financial crisis have not been sufficiently addressed. Rising and problematic levels of personal debt remain a significant problem in Canada and across the globe. Efforts to re-regulate the economic system have been minimal, and the mainstream policy narrative tends to focus on financial literacy education strategies for individuals. These approaches stem from the tendency to understand the personal debt problem in highly oversimplified terms, rooted in hegemonic rational choice theory. This perspective focuses on the problem’s appearance rather than its essence, individualizing the causes of the problem while ignoring systemic origins almost entirely. Such approaches are therefore inadequate to address overindebtedness because they are based on an inadequate understanding of the problem. An effective solution requires a much more adequate and multifaceted understanding, which this thesis seeks to provide. This thesis employs a critical realist approach, engaging both intensive and extensive research practices and combining empirical research with abstraction. First, it presents descriptive statistics at the level of the concrete to characterize the breadth and depth of personal debt and characterize it as a social rather than individual problem. Next, it uses intensive methods at the level of the abstract to abduct the personal debt problem from the rational choice context and form an alternative, more adequate theoretical understanding based predominantly on the critical theoretical work of Harvey (2011), McNally (2010), Ritzer (1995, 2014), and Ross (2012, 2013). Subsequently, there is a return to the level of the concrete to perform a critical discourse analysis of financial literacy education policy documents to establish evidence of rational choice theory operationalized in the policy discourse. Lastly, consistent with the emancipatory goals of critical realism, the thesis considers the implications of the preceding analyses for a range of potential solutions based on the alternative theoretical framework. Because each potential or proposed solution has its own opportunities and challenges by virtue of its structure, it is recommended that each proposed solution be used as a tool within a multifaceted framework with consideration for contextual factors.

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A Thesis Submitted to the Faculty of Graduate Studies and Research In Partial Fulfillment of the Requirements for the Degree of Master of Arts in Sociology, University of Regina. v, 119 p.
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