Study: debt has positive impact on young adults’ self-esteem (2)

Earlier this week, we wrote about a portion of the National Longitudinal Survey of Youth, which reported a significant surge in self-esteem and empowerment among young adults between the ages of 18 and 34. While this alone is not uncommon, the reason for this boost makes the study results interesting and fairly surprising: the survey questioned young adults about the effects of their credit card and education debt.

In sum, the survey found that young people who are facing significant credit card and student loan debt actually feel an increased sense of self-worth and empowerment, instead of stress and worthlessness. While this is certainly not a bad thing, the research indicates that young people may not be perceiving debt with an accurate sense of reality. This is most likely why respondents over the age of 28 were less positive and optimistic about their debt.

Interestingly, the feelings about debt varied significantly among economic classes. Young adults in the bottom 25 percent in total family income reported the most significant boost in self-esteem and feelings of mastery. These feelings only increased with amount of debt. This is likely because debt allowed young adults from low-income backgrounds to achieve things that they would not normally be able to achieve without taking on the debt.

In correlation, the middle class did not report a significant impact on self-esteem from holding educational debt, most likely because student loans are so common among peers. Credit card debt did lead to positive feelings, however, for members of this class. And the most affluent respondents reported no correlation between positive feelings and debt of either kind.

The different feelings among income classes could turn out to be somewhat of a catch-22 for many respondents, according to researcher Rachel Dwyer. “The groups that most need the debt – the middle and lower classes – get the most benefits to their self-concept,” she said, “but may also face the greatest difficulties in paying off what they owe.”

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