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Jordanians are overspenders, bad budgeters and in need of guidance — experts

By Omar Obeidat , Dana Al Emam - Feb 01,2016 - Last updated at Feb 02,2016

Consumers shop at a hypermarket in Amman recently (Photo by Amjad Ghsoun)

AMMAN – Jordanian households were described by consumer behaviour experts as overspenders that rarely budget their expenses. 

In recent interviews with The Jordan Times, the experts cited several "unfavourable" habits Jordanian shoppers need to ditch as they damage their finances. 

These behaviours, according to the specialists, include shopping addiction, competitive behaviour by trying to copy or follow others, not distinguishing between necessities and luxuries, show-off or flaunting behaviour, frequent visits to malls and shopping centres, and lack of planning to balance between income and expenses.

Irrational spending 

Marketing professor at the University of Jordan Hani Dmour said that the majority of middle-income households act in a way that leads to “inflation in their purchasing needs” by practising random or unreasonable buying behaviour.
Studies on Jordanian consumers suggest that their behaviour is unpredictable, Dmour said, adding that people do not sit and sort out their purchases as necessary, optional or luxury. 

"Sometimes they buy goods and services they do not even need," he added. 

Dmour, who is also the secretary general of the Higher Education Ministry, said that in general, Jordanian women have an "addiction or obsession" regarding shopping. 

Psychologist Hussein Khozai, a professor at Balqa Applied University, cited a study he had overseen that indicated that women with a shopping addiction feel better psychologically when they spend on luxuries. 

"When asked the reason for over-shopping, they [women surveyed] responded that they felt better," Khozai said.

Irrational buying decisions sometimes are motivated by copying others such as friends, relatives, work colleagues or neighbours, in addition to showing off, the two professors agreed. 

Khozai cited official figures as showing that an average Jordanian household suffers a shortfall of JD1,000 a year due to the gap between income and spending. 

Rising living costs vs income

But Mahmoud Kelani, a professor of marketing at Yarmouk University, insisted that the increasing costs of essential goods and services are to blame for the lack of budgeting by many Jordanian households. 

“There are several commodities that have gone up sharply over the past years such as energy prices, rentals, food and transportation as well as [college and private school] tuition fees,” Kelani said, adding all these goods and services have eaten away the income of consumers, who have not seen any rise in salaries for several years. 

But Dmour said that households can still prepare their spending bills by prioritising essentials or routine expenses such as education fees for schools and universities and bank instalments among other important payments. 

Technology: a social trend 

The experts agreed that the low cost and growing competition of commodities in the technology industry that include as mobile phones, tablets, Internet or latest models of TV sets made owning such devices a necessity. 

“A fair portion of consumers’ spending bill goes to telecom products or services,” Kelani said, adding that it has become a social trend people cannot give up. 

Dmour said that people in Jordan misuse mobile phones by spending a relatively large amount of money on phone cards per month, adding only a minority uses mobiles for work-related purposes or to meet basic communication needs. 

“Because phone calls are considered cheap in Jordan, people talk on the phone for long periods just to chat,” Khozai said. 

‘Spend and God will send’

Dmour said that Jordanians, whether in cities or villages, share same undesirable consumption habits. 

They spend on fast food, telecoms, smoking and cars among other optional items, he said. 

Khozai attributed such habits of spending on luxuries to the relatively easy repayment methods, such as instalment options by suppliers, loans by banks or credit cards. 

He said that the majority of Jordanians believe in the saying: “Spend and God will send.”

Amal Abdullah, a housewife in a village in Irbid, said she owns a mobile phone and so do her husband and four children, some of whom are still at school. 

Abdullah said when there is a banquet for friends or relatives, they sometimes order food from restaurants. 

Attractive offers 

Commercial ads for products offered at discount prices at shopping centres can sometimes be tempting to consumers, Dmour noted, adding that shoppers spend more money on buying items they don’t need just because they find them cheap. 

“Sometimes you would buy a package of items instead of one item, just because it is cheaper,” Kelani agreed. 

Amjad Rimawi, a private sector employee, said he and his wife often go through daily and weekly newspapers looking for advertisements of discounts and offers.

“When I was growing up, my parents did not worry much about comparing prices, especially those of fruits and vegetables, as they were determined by the government. Now competition is increasing between vendors,” he said.   

Consumer awareness and protection 

In Jordan, the Consumer Protection Society (CPS) was founded some 25 years ago. Its president, Mohammad Obeidat, said the society regularly monitors the “reasonableness” of prices of goods and services on the market, checks whether they meet national standards and findings are documented.

“In cases of price hikes, the society implements a work plan that addresses the reasons behind the increase. If the prices are found unreasonable, we contact the concerned government authorities and try to direct consumers towards cheaper, often local, options,” he told The Jordan Times.

But economist Wajdi Makhamreh said the CPS does is not popular among consumers, as its role is limited to protests against price hikes that are not followed by on-the-ground measures.

Obeidat challenged that by saying that through its channels of communication, which include telephones, a website and social media outlets, the CPS seeks to receive consumers’ complaints and to educate them on the need to adopt a “balanced consumerism approach”, insisting that its outreach policies are feasible. 

Makhamreh said CPS role in spreading awareness should expand to include advice related to health, nutrition and safety, such as warning parents against buying toys for their children that may be made of low-quality material or are inappropriate for their age.

Legislative ‘flaws’

But the heart of the problem, according to Deputy Mohammad Saudi, who previously headed the Lower House’s Finance Committee, lies in the “loopholes” in the Consumer Protection Law, due to a lack of “clear and specific” provisions.

One example, he told The Jordan Times, is that the law does not mention the correlation between oil prices and the costs of goods and services.  Logically, the prices of goods and services increase when fuel prices rise, but it seems that this rule does not work the other way around as one would expect.

Foodstuff Traders Association President Khalil Haj Tawfiq said the law should encourage the establishment of several consumer protection societies that work collectively across the country, calling for engaging women in the decision-making process of these societies, as they are usually the ones who shop and tend to know the prices.

Meanwhile, Saudi said consumer protection is a task for the government, noting that the concerned civil society organisations are not involved in the official policymaking process and their decisions are not obligatory for traders to follow.

“The point behind free markets is to encourage competition, but in a small market like Jordan’s, traders agree to form a cartel that controls the process,” the lawmaker argued, calling for reviving the Supply Ministry as a separate agency (now it is part of the Industry, Trade and Supply Ministry). 

On the other hand, Haj Tawfiq, recommended that this ministry create a department to monitor the prices of imported products in the country of origin, in cooperation with Jordan’s embassies abroad, and do the math when they are sold on the local market, taking all costs into account.

“This will help consumers get an idea about the reasonable price of any product,” he said.

The sector leader agreed with the lawmaker regarding the status of consumer protection in the Kingdom, adding that there is no entity that truly protects consumers at the moment.

“A free market economy does not mean the exploitation of consumers, as the government must still play a role in regulating the market,” he told The Jordan Times, adding that the government is primarily responsible for protecting consumers.

Haj Tawfiq said commercial high seasons, including the days before snowstorms, holidays and the back to school season, are the high time when consumer advocates’ guidance is needed the most in terms of protection and awareness.

Ghassan Kharfan, vice president of the Jordan Chamber of Commerce, said the CPS should direct consumers on how to save while shopping instead of accusing suppliers of seeking to make unreasonable profits.

Rimawi said he visits more than a single grocery store in order to compare prices of items and get the best bargains.

Although the process requires more time and energy from the father of three, he said the feeling of getting the cheapest price for a certain item is rewarding enough.

But the consumer behaviour experts said guidance cannot be the responsibility of one agency. 

CPS can play an important role, but the media, the education system and the community itself have to step in, Dmour said.  

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Comments

the main problem is the lack of financial literacy! we dont receive any proper education on money, how to deal with it, how to manage the emotional/practical side of it. we grow up following social norms when it comes to money, or abiding by beliefs and sayings that do not work in our favor.
money is a sensitive and overpowering topic that needs to be properly introduced and addressed starting with our youth.

I fully support the concept of budgeting, it helped me save money and manage my finances more efficiently. The problem with this article is it doesn't address the real issue - The financial income of the average household in Jordan. I was once broke, and I know exactly how it feels to see your money disappear a few days after getting paid - it's stressful and daunting. However, I do believe that budgeting is very important and should be a goal of every individual. It is a multiple-sided problem unfortunately.

This article made me laugh. How in god's name do you budget a 500 jd income? Between rent, medical expenses, groceries, heating costs, and other expenses, you need triple the amount of the average salary. Sadly, salaries remain the same when the cost of living is doubling every few months.

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