Debt Increases Self-Esteem in Young People

jennypenny · Post by **jennypenny** » Fri Jul 20, 2012 5:23 pm

related blog post

http://fsp.bc.edu/how-can-debt-enhance-self-esteem/
actual paper

http://www.sciencedirect.com/science/ar ... 9X11000299

dragoncar · Post by **dragoncar** » Fri Jul 20, 2012 6:40 pm

Because debt is correlated with spending, and spending increases self-esteem?

GandK · Post by **GandK** » Fri Jul 20, 2012 6:45 pm

Whiskey Tango Foxtrot.
Last paragraph:
"Indeed, Dwyer’s research found that the sheen of self esteem wears off by the time young adults reach age 28. When she analyzed a subset of adults 28 and older, she found “significant negative effects of debt” reduce feelings of mastery. Large amounts of debt become “more burdensome over time.”"
So the halo effect of debt only lasts long enough to allow young people to dig themselves a really big hole. Then the spending hangover kicks in.

jennypenny · Post by **jennypenny** » Fri Jul 20, 2012 6:48 pm

@dragoncar--Mostly. They also suggested "[student loan] debt has become a mark of being 'smart enough to get through college'.”
Another quote: "This finding is prevalent for young adults whose parents are in the lowest income groups and the middle class and is “blunted” for the upper class." I found this part disturbing. It reminded me of the post the other day about parents buying their kids too many toys. Again, those conclusions only applied to the middle class.
I know the middle class has taken a pretty hard hit in this economy, but it seems they are also contributing to their own demise.

Spartan_Warrior · Post by **Spartan_Warrior** » Fri Jul 20, 2012 8:02 pm

Hmm... PAYING OFF my student debt last year certainly boosted my "feelings of mastery". Does that count?

Ego · Post by **Ego** » Fri Jul 20, 2012 8:22 pm

1. Figure out what people secretly want.

2. Satisfy it with something that benefits you.

3. Get 'em hooked.... addicted.

4. Until that addiction is broken, you own a slave.
This is the business model of many of America's most successful businesses.
Starbucks

Budweiser

McDonald's

Visa & Master Card

Google & Apple

The entire fashion industry
The thing you provide may not satisfy any real need at all. What's important is that people BELIEVE that it does.
Advertising creates that belief. It creates these bastardized versions of reality that have nothing to do with.... reality.
I want to be an adult.

Adults have debt.

Debt is addictive.

I am enslaved.
Television is the devil.

Fred Tracy · Post by **Fred Tracy** » Fri Jul 20, 2012 8:48 pm

Nice post Ego. I've been trying to think of some way to create a false need like Starbucks, etc., lately. Fashion, as you mention, is a really prevalent example of a useless "need" perpetuated by advertising. And once someone buys into it, you could indeed make the argument that they are enslaved.
I used to have 4k of credit card debt around 21 years old. Can't say it much improved my self esteem, lol.

secretwealth · Post by **secretwealth** » Sat Jul 21, 2012 12:41 am

Great perspective, Ego, and I think you're absolutely right.
I find it interesting that the self-esteem boost from debt wears off at 28, which is also about the time when people start thinking seriously about long-term family plans (having children, raising children, planning for retirement, etc.). Suddenly the short-term benefits afforded by leveraging are vastly outweighed by the long-term liabilities of leveraging--and the pleasure of owing people money vanishes.

C40 · Post by **C40** » Sat Jul 21, 2012 12:59 am

The blog post seems to claim the study found that debt itself increases self esteem, but goes on to explain the self-esteem increase comes from the things bought by going into debt, not the debt itself. Wonder what the study actually found. I have to think that it is only a stupid person who gains self-esteem from debt itself (somehow imagining they are gaming the system or the future (it's your own future!!). The abstract or blog mentions possible differentiation between lower class an others. I can only imagine that maybe the results found were due to studying a large number of poorly educated / low class population.
I'm starting to wonder if what people are calling the millenial generation (or maybe the next one) should actually be called the 'YOLO' or 'Right now' generation. Sad... For a reality check though - of the young people that I know myself, most are not like this, so this stereotype is definitely not universal

secretwealth · Post by **secretwealth** » Sat Jul 21, 2012 1:47 am

I have to stick up for the Millennials: they have substantially less purchasing power and employment opportunities than the self-indulgent and greedy boomers, and have even less chances than we X/Yers had. I feel a lot of sympathy for them, and I think the YOLO crowd is really just responding to a financial apocalypse in their own powerless way.
I have to admit that I think the Millennials are harder working, less cynical, friendlier, and more practical than my generation. I respect them.

plantingourpennies · Post by **plantingourpennies** » Sat Jul 21, 2012 2:03 pm

@secretwealth I'll be fascinated to see how the Millenials turn out vs. the Xers. Will the experience of the great recession stick with them for 20 years, resulting in high-savings rates, and a return to individual responsibility, or will they just give up under the burden of non-defaultable student debt (indentured servitude?) and underemployment.

Chad · Post by **Chad** » Sat Jul 21, 2012 2:58 pm

I (an Xer) completely agree with you. The Millenials are the least culpable out of all the current generations for all loans other than student. And, even then the majority received bad advice at 18 from their Boomer parents.
It's not that hard to be less cynical than us.

jennypenny · Post by **jennypenny** » Sat Jul 21, 2012 3:06 pm

"It's not that hard to be less cynical than us."
Haha, but can you blame us (Xers)? How could we not end up cynical following the boomers?

Ego · Post by **Ego** » Sat Jul 21, 2012 6:37 pm

We Xers and older became adults - ie. we shaped our future selves - at a time when the art of encouraging people to keep up with the Joneses was just that, an art. It was practiced by millions of amateur-psychologist-salespeople and a few at the top who used the crude social-psychology of the time to manipulate on a kindergarten level. Their goal was to tap into and exploit our hidden desires
Today Millenials have come of age and had their future selves shaped by the *science* of encourage people to keep up with the Joneses. The smartest people in each of the scientific fields connected to psychology/sociology/marketing/data mining.... focus all of their thinking on how to get you to buy more. Their goal is to *create* and exploit our hidden desires.
The world of marketing has changed remarkably fast. So fast that our minds can't keep up. Millenials are hard-wired into it. They are the most vulnerable.
I believe we will see a future where nature selects for one trait above all others - skepticism.

Dragline · Post by **Dragline** » Sat Jul 21, 2012 6:55 pm

@C40 -- yes, I sense a "correlation equals causation" problem that is endemic when you look at headlines about studies. Although going into debt does seem to be a "rite of passage" for many.
But the article does not distinguish between types of debt -- i.e., is higher self esteem associated with buying a lot of stuff or just expensive educations? And if its the education, wouldn't that achievement confound the debt data?
This sounds a bit like a GIGO exercise.

Post by **jacob** » Sat Jul 21, 2012 7:27 pm

"I sense a "correlation equals causation" problem that is endemic when you look at headlines about studies."
Well, all one needs to perpetrate yet another Mickey Mouse study is a few dozen college students and a dollar each for their time to get "data", a statistical program like SAS and then run t.test(y~x) and lm(y~x) on the data(*) and then write a conclusion that supports some common prejudice, like "people who use facebook are attention whores". Some journalist is sure to pick it up ...
(*) The only hard part here is understanding the program output which for historical reasons is phrased as a triple-negative, that is,"failing to reject the null hypothesis" but once that's learned, there's no stopping the next publication.

secretwealth · Post by **secretwealth** » Sat Jul 21, 2012 8:09 pm

"Will the experience of the great recession stick with them for 20 years, resulting in high-savings rates, and a return to individual responsibility, or will they just give up under the burden of non-defaultable student debt (indentured servitude?) and underemployment."
I think it's going to stick with them for a long, long time. Remember, we're already through year 5 of an economic standstill; the recessions of the late 80's and 99-01 are peanuts compared to this crisis.
I really think extreme consumerism is in its death throes.

C40 · Post by **C40** » Sun Jul 22, 2012 2:59 am

On Jacob's mention of bad stats - my company has been training people in Six Sigma (Green Belts). I believe many folks (myself included) just try the analysis differently until you get results that appear satisfactory. Even my DMAIC coach pointed me in this direction. His coaching was really just advice on how to make my storyboard look convincing. Thanks dude!
(sorry to go off subject)

HSpencer · Post by **HSpencer** » Sun Jul 22, 2012 3:56 am

@Ego
Three thumbs up for having it figured out. Finally someone who puts it like it is.
Now on debt:
All debt is not bad up to a point. Everyone can't run to the outback and build a dugout to live in. All of our 300+ million people, many trained in pure entitlement and greed as American citizens, can't live off grid and eat deer or rabbit. So there is going to be some debt. The problem is "how much"? 1000 square feet or 3500 square feet? That is where the deal gets skewed up.

Being a very conservative boomer, and one who is often linked into the stereotype (as in this thread) I do agree that the boomer generation encompassed debt THROUGH greed.

Example:

Mr Boomer had a 1200 Sq Ft paid free and clear. Comes the prosperity of the Clinton/Bush years and money is laying all over the lobby of the bank. Mr Boomer's arrogant brother in law, BillyBob, launched out for a 3000 sq ft McMansion and Mr Boomer just couldn't take it!!!! (He would rather saw off his leg at the knee than let his asshole B-I-L beat him at "anything"). So he goes in deep too. Jobs dry up, and the Bankgangsters do their money theft by transfer of wealth magic. Now both Mr Boomer and B-I-L are in foreclosure. HSpencer, also a boomer, is NOT in foreclosure due to his ultra conservative nature. So the score is two boomers-0 and one boomer-1. The stereotype is built on averages.

Because of the above, we now have elderly people who will never be able to retire, and also those elderly who have lost their homes, ones of course they could not afford anyway.

So let us use debt as intended. The youth need to get married and have a start(er) home that is MODEST in accordance with their means. Later when they become that big corporation CEO they can build the big house and pay cash.

Ego · Post by **Ego** » Sun Jul 22, 2012 4:15 am

HSpencer, don't think I'm ungrateful for the compliment, but that third thumb worries me a little.