Study: debt has positive impact on young adults’ self-esteem (1)

In a surprising new study, researchers found that young adults who are facing significant education and credit card debt actually experience a sense of empowerment from their debt, instead of feelings of stress and worry. Interestingly, these positive feelings were stronger among young adults from low-income backgrounds. Researchers speculate that the self-esteem boost comes from a sense of accomplishment and control over their lives and finances.

The study, which was part of the National Longitudinal Survey of Youth, questioned almost 4,000 young people between the ages of 18 and 34. The results were surprising: among survey respondents in the 18 to 27-year-old age range, a higher amount of student loan and credit card debt correlated with higher self-esteem and feelings of control.

The study focused on two types of debt: student loans and other education debts, and credit card debt. Researchers expected to see a jump in positive feelings from student loans, with young people largely seeing those debts as an investment in their future, and associating them with their educational accomplishments.

However, researchers were surprised that credit card debt was also associated with increased self-esteem and a sense of mastery. One possible explanation for this is that young people use credit cards to fund educational expenses, such as textbooks and fees related to their college experience. But the researchers also hypothesized that credit cards gave young people a sense of freedom, allowing them to purchase items they would not otherwise have been able to afford.

Along this line, the study also found that older survey respondents had significantly fewer positive emotions associated with their debt. This is somewhat unsurprising to anyone who has dealt with either of these types of debt in the long term. Respondents over the age of 28 reported feelings of stress related to their debt, researchers reported, because they may be realizing that they have overestimated how much money they were going to earn in their jobs and how quickly they would pay off their debts.

We will continue this post later this week with a look at the different economic classes and how they perceive debt.

Source: Ohio State University, “What, me worry? Young adults get self-esteem boost from debt,” 6 June 2011