Psychological Ownership of (Borrowed) Money

Abstract

The current research introduces the concept of psychological ownership of borrowed money, a construct that represents how much consumers feel that borrowed money is their own. The authors observe both individual-level and contextual-level variation in the degree to which consumers feel psychological ownership of borrowed money, and variation on this dimension predicts willingness to borrow money for discretionary purchases. At an individual level, psychological ownership of borrowed money is distinct from other individual factors such as debt aversion, financial literacy, income, intertemporal discounting, materialism, propensity to plan, self-control, spare money, and tightwad–spendthrift tendencies, and it predicts willingness to borrow above and beyond these factors. At a contextual level, the authors document systematic differences in psychological ownership between different debt types. They show that these differences in psychological ownership manifest in consumers’ online search behavior and explain consumers’ differential interest in borrowing across debt types. Finally, the authors demonstrate that psychological ownership of borrowed money is malleable, such that framing debt using language lower in psychological ownership can reduce consumers’ propensity to borrow.