Psychological Ownership of (Borrowed) Money

50 Pages Posted: 27 Aug 2020

See all articles by Eesha Sharma

Eesha Sharma

Dartmouth College; Dartmouth College - Tuck School of Business

Stephanie Tully

Stanford University

Cynthia Cryder

Washington University in St. Louis - John M. Olin Business School

Date Written: July 20, 2020

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. We 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, inter-temporal 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, we document systematic differences in psychological ownership between different debt types. We show that these differences in psychological ownership manifest in consumers’ online search behavior and explain consumers’ differential interest in borrowing across debt types. Finally, we demonstrate that psychological ownership of borrowed money is malleable, such that framing debt in terms of low psychological ownership can reduce consumers’ propensity to borrow.

Keywords: consumer finances, financial decision making, debt, mental accounting, psychological ownership

JEL Classification: M31, M30, D10, D14, G02, I30, A1

Suggested Citation

Sharma, Eesha and Tully, Stephanie and Cryder, Cynthia, Psychological Ownership of (Borrowed) Money (July 20, 2020). Available at SSRN: https://ssrn.com/abstract=3656627 or http://dx.doi.org/10.2139/ssrn.3656627

Eesha Sharma (Contact Author)

Dartmouth College ( email )

Department of Sociology
Hanover, NH 03755
United States

Dartmouth College - Tuck School of Business ( email )

Hanover, NH 03755
United States

Stephanie Tully

Stanford University ( email )

Stanford, CA 94305
United States

Cynthia Cryder

Washington University in St. Louis - John M. Olin Business School ( email )

One Brookings Drive
Campus Box 1133
St. Louis, MO 63130-4899
United States

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