Empowered by Debt?

The results of a recent survey indicate that young adults, 18-27 feel empowered by debt. While the authors of the study were not surprised that student debt would make young adults feel powerful about their future, they were surprised to learn credit card and other forms of debt had the same emotional effect. At first I was shocked by these findings, who could possibly feel empowered by $20,000 of student debt, but after some reflection I have concluded this makes perfect sense.

When I graduated from high school I thought I knew everything necessary to conquer the world. Actually, I probably thought I knew a great deal more than everything. It is a characteristic of the age. I suppose that if young people didn’t feel that way they would never leave their homes, get married, and start families of their own. Students tend to over estimate their future earning power, resulting in a willingness to take on an unreasonable amount of student debt, debt that does not go away even in bankruptcy. Since the crash in 2008, a persistently high unemployment rate, particularly among young people, has highlighted the dangers of this sort of over exuberant optimism.

Rachel Dwyer, lead author of the study and assistant professor of sociology at Ohio State University, was surprised by their enthusiasm for credit card debt, "We thought educational debt might be seen as a positive because it is an investment in their future, while credit card debt could be viewed more negatively," she said. "Surprisingly, though, we found that both kinds of debt had positive effects for young people. It didn't matter the type of debt, it increased their self-esteem and sense of mastery."

Again this makes sense. For the first time in their lives their parents are not standing over their shoulders saying, “NO!” It has to be a rush proving that you are an adult who only has to wave the magic plastic card at any desire to find fulfillment.

The article states the authors of the study can’t decide if this is a good thing or a bad thing. "Debt may make young people feel better about themselves in the short-term, but that doesn't mean it won't have negative consequences in the long-term," Dwyer said. "We found that the positive effects may wear off over time, but they still have to pay the bills. The question is whether they will be able to. There needs to be additional research to answer this question." Indeed, even if the professors are not funded, the young debtors will be exploring this question over the next 30 years or so.

The authors of the study discovered the biggest self esteem bump from debt came from lower class young adults. I guess, for the first time in their lives, they were able to purchase items they could only possess in their dreams. Middle class children received less of a bump. They view debt as a normal rite of passage. Adults borrow money and make payments for the rest of their lives. It is just the way of the world.

The article concludes with the discovery that these feelings of power don’t last very long, "By age 28, they may be realizing that they overestimated how much money they were going to earn in their jobs," Dwyer said. "When they took out the loans, they may have thought they would pay off their debts easily, and it is turning out that it is not as easy as they had hoped."

At least in one case it didn’t take a young adult that long to discover debt is not an unmitigated blessing. One morning while eating breakfast at the local McDonalds I found myself eavesdropping on a conversation between two teenaged employees, one employee was complaining in a loud emotional rant strewed with a liberal use of obscenity. “I hate this ____, ____ job. I won’t stay at this _____ job if I didn’t have this ___, _____ car payment. He continued with the ____, ____ job and ____, ____ car payment theme for several minutes while I quietly smiled and thought, “Welcome to the real world, son.”