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We Don’t Seem to Dread Debt

That is the hypothesis I can reach from a very interesting study published in the Harvard Business Review “Anticipating Pain is Worse Than Feeling It” ¹. The conclusion of the study (which you have to pay to read, my apologies) is that the instinct to “Get it Over With” overrides our ability to wait patiently for something (specifically in the case of physical pain).

Many Dread the Dentist, but evidently not Debt
Photo from Marathon Man Courtesy Paramount Pictures

As the study is about physical pain and how we deal with it, the example (I am interested in) put forward in the piece was:

“… People would rather get a level 6 shock now instead of waiting five minutes for a level 4 shock…”

The article did not profess that these findings could be transferred from physical pain to mental stress, but given I am a simple country financial blogger, let’s make that leap, specifically in the area of mental anguish that carrying long-term debt causes (i.e. all future statements here are conjecture on my part).

If we had a feeling of dread about Debt and what it will do to us financially in the future, one point of view would suggest that if we did we’d want to “Get it Over With” (i.e. get rid of  Debt early, or pay it off) to lower anxiety later on, but that is painfully obvious that this is not the case with Debt, since we keep seeing debt loads build and build, and in fact the opposite seems to be true (i.e. we seem to want to take long-term pain over short term pain).

The other point I suggest is that the purveyors of Debt (i.e. banks, credit cards, etc.,) may be doing too good a job mitigating the Dread that Debt should bring you, by masking your future problems, or by making it seem simple to pay off each debt (without thinking about the big picture of debt), and thus you don’t think there is a bad thing in the future, so this model doesn’t apply to debt. If this is the case they are doing an excellent job of mitigating and masking that long-term pain.

Why doesn’t Debt cause us Dread? It should

¹ – Harvard Business Review Volume 92 no.3

Feel Free to Comment

  1. I think it’s because most people have a hard time imagining their future selves. Some studies show that given even a vivid picture of what they’ll be like in 40 years, people see it as a different person. Why should they care about a total stranger? It’s almost impossible for a 20-something to imagine themself as a senior citizen.

  2. I dread debt, but I also dread retirement as I have so little put away. at 52, I should have at least 250k put away to grow into what I need to retire on. That is NOT happening…

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