Low self esteem may lead to credit card debt?

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Niro Sivanathan, associate professor of organizational behavior at London Business School, explains how spending with touchless forms of payment (like a credit card or online) can lead to spending more money than with cash.

Our work was taking the well-established effect of credit card expenditure explained above and extending this work to see if those with lowered self-esteem would find this purchasing platform especially appealing when looking to acquire luxury goods," described Sivanathan. "Our research shows purchasing luxury goods on credit is especially attractive to those who have low self-esteem," he explained in an LBS news release. "These individuals seek to boost their self-esteem by purchasing high-status goods to make them feel better about themselves. The combined effect of low self-esteem, high status goods and the ability to purchase on credit creates a 'perfect storm.' This can be dangerous; consumers with low self-esteem are at higher risk of falling into debt.

It makes sense that people would be willing to spend more when using a credit card than when using cash, because it doesn't feel like they are physically spending as much. However, I would have never connected this idea to the possibility that those with lower self esteem would be more prone to debt. What do you guys think? Why do people with less money spend more?

Comments (17)

Jan 8, 2017

Lol, how else do washed-up losers make it?

Jan 8, 2017

We live in a consumerist age where we're constantly exposed to the messages 'new material possessions = happiness' and 'spending money = recognised display of status'. We're taught that spending money on material possessions will release happy the happy endorphins.

We're also surrounded by advertising that constantly tells us that we are entitled to these material goods. If you listen to many ads, you will here the voice over literally say something like "because you deserve it", "you earned it" or "because you are worth it".

It's not surprising that people who are depressed, have low self esteem or are otherwise in search of happiness see spending money as a way out of that state of mind. Ergo, more prone to credit card debt.

    • 1
Jan 9, 2017
SSits:

We live in a consumerist age where we're constantly exposed to the messages 'new material possessions = happiness' and 'spending money = recognised display of status'. We're taught that spending money on material possessions will release happy the happy endorphins.

I do not have a medical background, but I believe for a lot of people, retail therapy does increase endorphin in the brain, although for a brief period of time.

Jan 9, 2017

It is really true as people never count their cash while making payments through card and that seems to be more simple and easy than paying by money.

Jan 9, 2017

Pretty obvious to see that the vast majority of people buy luxury goods to make themselves feel good. Luxury goods exist so people can show others their level of wealth--again, this is generally people trying to compensate for their self-esteem. Unless you are purchasing luxury goods because your are an enthusiast in that area (cars, watches, fashion), why else would someone purchase a luxury good?

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Jan 9, 2017

low self esteem = need to show off to/ or keep up with your friends/ family who may be in higher income brackets = purchasing items that outstrip your income = high levels of debt. Makes perfect sense to me.

Jan 9, 2017

I actually believe the opposite of this. But I also separate low self esteem apart from depression and I think this situation can far better fit a depressed person than a person with low self esteem.

If you truly feel low about yourself I don't believe in that frame of mind you believe that buying some luxury goods will all the sudden make you feel better about yourself.

The few folks I know carrying unnecessary debt (credit cards, auto loans to a degree) are not in the category of having low self esteem but more along happy, feel good about themselves but think that next Swiss watch brings them up a level or two.

Get your facts first, then you can distort them as you please.

Jan 9, 2017

I agree with this point. Most of the people I know in credit card debt actually think very highly of themselves and therefore believe that they deserve the items.

Can we all take a moment to reflect on the amount of people paying 15%+ interest rates on drinks at happy hour? Absolutely insane that people think it's normal.

    • 1
Jan 9, 2017

1.) depression and low self esteem are correlated but we aren't talking about cases of clinical depression here
2.) the appearance of "thinking highly of themselves" is just that, the appearance of that trait

Best Response
Jan 9, 2017

In other new, water is wet.

Jan 10, 2017

Shower sex says otherwise.

...

Jan 10, 2017
BreakingRich:

Shower sex says otherwise.

What type of shower sex are you having? Is it dry? You need to find younger chicks

Jan 10, 2017

people are either dupers or dupees. credit card companies have duped these suckers for decades and it won't stop anytime soon

Jan 10, 2017

It makes perfect sense. Its the same reason why often alcaholics, addicts, and people with eating disorders always have low self-esteem--the idea that one more purchase, one more credit card, will make you happy. (E.G. same as one more drink, one more eating binge.)

Jan 10, 2017

To be fair, drug addicts can die from a horrific withdrawal. It is not really the same thing as going into credit card debt to buy a Rolex. Also most of the heroin addicts from the current epidemic were originally given opiates from their doctor after surgery or procedure.

Jan 10, 2017
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