Helping Those That Hide: Anticipated Stigmatization Drives Concealment and a Destructive Cycle of Debt

Abstract

Debt accumulation has been linked to materialism, impulsivity, shortsightedness, self-control, and lifestyle preferences. However, applying stigma theory allows novel insights into debt accumulation for middle-class individuals who access a variety of credit-related products. The authors define anticipated stigmatization of debt as the negative judgment and discrimination an individual expects to experience because of their consumer indebtedness. Results from a series of studies demonstrate that although financial stress motivates behaviors designed to reduce debt, debtors who anticipate stigmatization perform a variety of concealment behaviors (secrecy, social spending, and help avoidance) that hinder debt reduction and have negative effects on well-being. To understand how to help these individuals, the authors collaborated with a financial education company, designing a field experiment to examine the efficacy of a behavior change course. Individuals who anticipated stigmatization and formed new social connections in a community-based condition reduced their consumer debt. Although the emotional effect of community-based support has been examined in other stigma contexts, this study is the first to investigate the effect on well-being in a debt context and link social benefits to actual behavior change in terms of debt reduction behaviors and debt repayment.