Connection found between low self-esteem and credit card spending

A new report by researchers Niro Sivanathan of the London Business School and Nathan Pettit of Cornell University has found a link between low self-esteem and spending on credit cards.

The study, which is published in the current issue of Social Psychological and Personality Science, found that spending on luxury goods on credit can often be an activity people turn to when their egos are threatened - for instance by performing badly on a test.

College students were given negative results to an exam and asked how they would pay for a pair of designer jeans.

"The students who thought about everyday jeans did not increase how much they would pay for regular jeans when threatened and the threat did not change their willingness to use credit over cash," the study noted.

Chartered Psychologist Kim Stephenson added: "It's interesting in the sense that there is a well-known series of experiments demonstrating that people tend to pay more for things on credit than on cash. Without seeing the study in full, it's hard to say whether this actually contradicts the established findings, but the quote given implies it. I also wonder how big the study was and what "baseline" they had for people choosing credit over cash, because existing evidence is that impulse buying and "retail therapy" are more common (and expenditure is greater) on credit.

"It would be interesting to know how they define self-esteem (presumably it is measured by a psychometric). One issue the Dalai Lama has identified is that the west is often obsessed with "self-esteem" - it can lead to people being self-obsessed and in many wastern cultures (and in Buddhism) it is not necessarily seen as a good thing, as it means that people tend to put themselves first and not be altruistic - altruism and caring for others being an important quality in those cultures and also linked to happiness in positive psychology.

"So it is intellectually interesting, but in practical terms it is a bit of a truism. It is saying that when depressed a lot of people go for "retail therapy" and if you are going for retail therapy you're hardly going to buy boring everyday things like practical clothes or toilet paper, you'll splash out on unsuitable shoes or a gadget you don't need - or some designer jeans."

Earlier this year, Emma Mamo, Policy and Campaigns Manager at Mind, stated that the self-esteem of a person can take a major blow if they are made redundant and are unable to find another job quickly.