Do you think of borrowed money as ‘your money’?

If you borrow money from someone, it is, by definition, money that is available for you to use but owned by someone else. Despite this feature of borrowed money, Eesha Sharma (Dartmouth College), Stephanie Tully (Stanford University) and Cynthia Cryder (Washington University in St. Louis) find in their recent research that consumers can experience feelings of psychological ownership of borrowed money. In their current article, the authors establish the concept of psychological ownership of borrowed money and investigates its implications for consumer borrowing. They observe that consumers experience psychological ownership to differing degrees: Consumers might think of a credit as belonging to the bank that lent it or rather as their own money, similar to using their cash. This variation predicts which consumers are more willing to use borrowed money. The authors point out that differences in psychological ownership do not merely reflect a misunderstanding that borrowed funds must be repaid, but psychological ownership of borrowed money reflects the extent to which consumers subjectively feel that borrowed money is their own.

You can read more about this research here.