Psychological Ownership of (Borrowed) Money

The current research introduces the concept of psychological ownership of money, the notion that consumers perceive money in differing degrees as their own. We suggest that this concept is particularly important in the realm of consumer debt, where consumers use borrowed money. We show that individuals naturally vary in the extent to which they experience psychological ownership of money, and variation on this dimension predicts willingness to borrow for discretionary purchases. Moreover, this construct is distinct from other individual-level factors such as debt aversion, financial literacy, income, intertemporal discounting, materialism, propensity to plan, and self-control, and it predicts willingness to borrow above and beyond these factors. We further show that psychological ownership of borrowed money is shaped by context. Specifically, we document systematic differences in psychological ownership across debt types that can be used for discretionary purchases, and show that these differences explain consumers’ interest in borrowing. Finally, we find that differences in psychological ownership manifest in online search behavior, and can be leveraged to predict patterns of online search behavior for different debt types.