Gen Y Feels Empowered by Debt

A new study by Ohio State University shows that young people aged 18-27 feel empowered by their debt. You read correctly – not stressed or depressed, but empowered.  In fact, having debt correlated with higher self esteem and feelings of mastery or “control on their lives.”

As a lead author of the study, Rachel Dwyer points out that debt helps people achieve things they might not have otherwise been able to afford, like college.   The study asked over 3000 young adults about total credit card debt and loans taken out for college.  And then analyzed their feelings of self-esteem and sense of mastery (relative to the amount of debt held).

“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,” Dwyer 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.”

The results show that Gen Y see debt as an investment, and their self-esteem rises due to feelings over control of their future.

 

Do you think this points towards a nonchalant attitude towards debt? Or a fair one?  On one hand, I’m inclined to think that Gen Y are being over confident or perhaps feel that they will always have the support of their Baby Boomer parents to fall back on. On the other hand, perhaps debt is just a means to an end, and Gen Y are right to be confident in the opportunities afforded to them through taking on debt.

However, the study did show that the stress of debt increases with age, so it will be interesting to see the results of the same study with the same people in five years time.