Jun 09, 2011 1:34 AM GMT
What, me worry? Young adults get self-esteem boost from debt
COLUMBUS, Ohio – Instead of feeling stressed by the money they owe, many young adults actually feel empowered by their credit card and education debts, according to a new nationwide study.
Researchers found that the more credit card and college loan debt held by young adults aged 18 to 27, the higher their self-esteem and the more they felt like they were in control of their lives. The effect was strongest among those in the lowest economic class.
Only the oldest of those studied – those aged 28 to 34 – began showing signs of stress about the money they owed.
"Debt can be a good thing for young people – it can help them achieve goals that they couldn't otherwise, like a college education," said Rachel Dwyer, lead author of the study and assistant professor of sociology at Ohio State University.
But the results offer some worrying signs about how many young people view debt, she added.
"Debt can be a positive resource for young adults, but it comes with some significant dangers," Dwyer said.
"Young people seem to view debt mostly in just positive terms rather than as a potential burden."
Dwyer conducted the study with Randy Hodson, professor of sociology at Ohio State, and Laura McCloud, an Ohio State graduate now at Pacific Lutheran University.
The findings appear in a recent issue of the journal Social Science Research.
The study involved 3,079 young adults who participated in the National Longitudinal Survey of Youth 1979 – Young Adults sample. The NLSY interviews the same nationally representative group of Americans every two years. It is conducted by Ohio State's Center for Human Resource Research on behalf of the U.S. Bureau of Labor Statistics.
For this study, the researchers examined data on two types of debt: loans taken out to pay for college, and total credit-card debt. They looked at how both forms of debt were related to people's self-esteem and sense of mastery – their belief that they were in control of their life, and that they had the ability to achieve their goals.
Researchers have had two competing views of how debt might affect people's self-concept, Dwyer said. Some have said debt should have positive effects because it helps people invest in their future. Others have said credit should have negative effects because it allows people to spend more money than they make, thereby risking their future.