1. Abstract
The Psychological Ownership of Borrowed Money Scale is an empirical psychometric instrument developed by Eesha Sharma, Stephanie M. Tully, and Cynthia Cryder (2021) to quantify the subjective degree to which consumers psychologically perceive borrowed financial capital as their own personal property rather than an external liability owed to a third-party creditor. Drawing upon foundational theories of psychological ownership and behavioral mental accounting, the scale captures individual differences and situational variations in the cognitive integration of credit, debt instruments, and loaned capital into the self-concept. The measurement model typically operates as a unidimensional construct consisting of targeted Likert-format items assessing core facets of possession: subjective feelings of ownership, identification of the funds as belonging to the self, and the cognitive framing of loan disbursements as an early realization of one’s own future income rather than an outstanding debt burden.
Psychometric evaluations across multiple laboratory, online panel, and field experiments demonstrate excellent internal consistency, with Cronbach's alpha coefficients consistently exceeding .85 across diverse lending contexts (e.g., revolving credit card debt, peer-to-peer lending, personal installment loans, and Buy Now Pay Later [BNPL] programs). Confirmatory factor analyses confirm a robust single-factor structure that remains invariant across diverse consumer demographics. The scale exhibits strong construct, convergent, discriminant, and predictive validity, significantly predicting downstream financial behaviors including willingness to spend, diminished pain of paying, accelerated consumption rates, preference for nonessential discretionary purchases, and a systematic underestimation of compounding interest costs. By revealing the psychological mechanisms underlying debt-financed consumer spending, this instrument provides researchers, financial regulators, and behavioral economists with an essential diagnostic tool for identifying vulnerability to unsustainable household borrowing.
2. Keywords
psychological ownership, borrowed money, consumer debt, mental accounting, pain of paying, credit card spending, behavioral economics, consumer financial decision-making, debt literacy, scale validation
3. Authors
The Psychological Ownership of Borrowed Money construct and its empirical measurement system were developed and validated by a consortium of researchers in behavioral decision research, consumer psychology, and marketing:
- Eesha Sharma, Ph.D. — Associate Professor of Marketing, Fowler College of Business, San Diego State University (previously at the Tuck School of Business at Dartmouth College). Her research examines consumer financial decision-making, debt management, perceived resource scarcity, and charitable giving.
- Stephanie M. Tully, Ph.D. — Associate Professor of Marketing, Graduate School of Business, Stanford University. Her scholarship investigates consumer financial well-being, the psychology of money, resource allocation, and how consumers manage discretionary versus debt-financed expenditures.
- Cynthia Cryder, Ph.D. — Professor of Marketing, Olin Business School, Washington University in St. Louis. Her empirical research focuses on behavioral economics, judgment and decision-making, the psychological pain of paying, and household financial health.
Corresponding correspondence regarding the conceptualization of the construct can be directed to the authors through their institutional affiliations or via the administrative editorial offices of the Journal of Marketing Research.
4. Purpose
The primary purpose of the Psychological Ownership of Borrowed Money Scale is to assess and operationalize a pervasive yet historically overlooked psychological distortion: the cognitive tendency of borrowers to mentally represent borrowed funds as personal wealth. Traditional normative economic models, anchored in classical expected utility theory and permanent income hypotheses, assume that rational agents treat borrowed capital strictly as a liability. Under standard economic assumptions, an individual who borrows $1,000 acquires an asset offset by an equivalent or greater liability (accounting for interest rates and origination fees). Consequently, the rational actor should track the net economic position and treat the expenditure of borrowed funds with heightened scrutiny due to the structural carrying costs of debt.
Empirical consumer behavior, however, demonstrates profound departures from this normative benchmark. Consumers routinely accelerate spending, exhibit relaxed price sensitivity, and engage in high-risk purchasing when transacting with credit cards, retail loans, and short-term credit vehicles. While behavioral economists historically attributed this spending premium to liquidity constraints or transaction decoupling, the Psychological Ownership of Borrowed Money Scale was engineered to isolate the psychological sense of possession that arises once credit is disbursed or authorized.
In both clinical financial therapy and empirical research, the scale serves several critical functions:
- Diagnostic Assessment of Debt Vulnerability: It identifies individuals who possess an acute cognitive vulnerability to debt accumulation by measuring the extent to which they view loans as “my money” rather than “the lender's money.”
- Evaluation of Financial Products: Financial consumer protection agencies and behavioral researchers use the scale to evaluate modern financial technologies—such as Buy Now Pay Later (BNPL) platforms, revolving micro-lines of credit, and virtual digital wallets—which intentionally minimize the cognitive friction between borrowed capital and personal assets.
- Intervention Design: The scale enables intervention scientists to design and assess financial literacy programs, cognitive debiasing frames, and account dashboard architectures aimed at reinstating the perceived liability status of borrowed resources.
- Theoretical Expansion: It enriches cognitive models of spending by linking the subjective feeling of ownership to the attenuation of the “pain of paying,” thereby explaining why consumers treat loan proceeds with the same entitlement as earned, hard-won labor income.
5. Psychological Construct
The construct of psychological ownership over borrowed money is defined as a state- or trait-level cognitive-affective condition in which an individual feels that borrowed financial resources belong to them personally, viewing these funds as an extension of the self rather than an external obligation. Unlike legal ownership, which represents a legally recognized property right, psychological ownership is an entirely phenomenological experience captured by the psychological sentiment: “This is mine.”
When applied to debt and consumer credit, the construct exhibits distinct structural dimensions and psychological manifestations:
5.1 Perceived Personal Belongingness
The core dimension of the construct reflects the immediate, intuitive feeling that the borrowed funds reside within the consumer's personal asset boundary. When a consumer experiences high psychological ownership over credit, the capital in their bank account, loan disbursement, or credit line is subjectively integrated into their aggregate liquid wealth. For example, when viewing a bank balance that includes a recently deposited $5,000 personal loan, an individual with high psychological ownership focuses exclusively on the$5,000 liquidity, experiencing emotional pride, personal empowerment, and heightened spending entitlement. Conversely, an individual low in psychological ownership perceives the same $5,000 as foreign, encumbered capital that belongs entirely to the banking institution until full amortization is achieved.
5.2 Future Income Pre-allocation vs. External Liability Framing
A crucial cognitive facet captured by the construct is the mental accounting mechanism through which borrowed money is legitimized. Borrowers high in psychological ownership mentally classify the borrowed sum as an early realization of their own future earned income. They frame the transaction not as receiving someone else's capital, but rather as “unlocking” or “accelerating” their own future earnings into the present moment. Because people inherently feel complete psychological ownership over their future labor and anticipated salary, transferring this sense of entitlement onto the borrowed capital neutralizes any cognitive dissonance associated with being in debt.
5.3 Boundary Infiltration into the Extended Self
Grounded in the psychological paradigm of the extended self, money serves as an instrumental proxy for personal autonomy, agency, and self-worth. High psychological ownership of borrowed funds involves absorbing the financial capital into the boundary of the extended self. When spending these funds, consumers feel they are exercising personal agency using their own resources. This integration drastically alters spending choices: consumers become far more inclined to allocate borrowed money toward hedonic, luxury, or status-signaling acquisitions, precisely because spending “one's own” money on self-actualizing goods feels psychologically justifiable, whereas spending “someone else's” loan proceeds on luxuries typically triggers moral guilt and anxiety.
6. Theoretical Framework
The Psychological Ownership of Borrowed Money Scale is anchored at the intersection of three major theoretical domains: the theory of psychological ownership, mental accounting theory, and the behavioral framework of the pain of paying.
6.1 Pierce, Kostova, and Dirks' Theory of Psychological Ownership
The foundational architecture of the scale is derived from the seminal work of Pierce, Kostova, and Dirks (2001, 2003). Pierce and colleagues posited that psychological ownership emerges to fulfill three fundamental human motives: efficacy and effectance (the desire to control one's environment), self-identity (using objects to define and express who one is), and having a “home” or place of security. Pierce et al. identified three primary psychological routes through which ownership develops:
- Controlling the Target: The ability to manipulate, deploy, or consume an object generates a profound sense of ownership over it. In consumer finance, when an individual receives absolute spending control over borrowed money via a credit card or direct bank deposit, this immediate physical and transactional control induces the subjective feeling that the money is theirs.
- Coming to Intimately Know the Target: Detailed planning and budgeting regarding how the money will be spent fosters cognitive familiarity and psychological intimacy with the funds.
- Investing the Self into the Target: When consumers expend cognitive effort, emotional labor, or time applying for credit, submitting documentation, and envisioning future consumption, they invest their personal energy into the loan, solidifying the perception that the capital is an organic extension of the self.
6.2 Thaler's Mental Accounting Theory
The scale integrates Richard Thaler's (1985, 1999) mental accounting theory, which articulates that individuals categorize, budget, and evaluate economic outcomes into distinct, non-fungible cognitive accounts. According to mental accounting principles, funds designated as “windfalls,” “hard-earned labor,” or “credit liabilities” carry different marginal propensities to consume. The Psychological Ownership of Borrowed Money Scale captures the specific cognitive phenomenon wherein borrowed funds are mentally booked into a personal asset account rather than a liability or debt account. By violating the normative principle of fungibility, consumers who psychologically “own” debt capital treat it as spendable liquidity, insulating themselves from the ongoing realization that their future consumption must be severely discounted to repay the principal and interest.
6.3 Prelec and Loewenstein's Pain of Paying Paradigm
The operational framework relies heavily on the pain of paying paradigm pioneered by Prelec and Loewenstein (1998). Under normative conditions, the immediate psychological pain experienced during a financial transaction acts as a natural, self-regulating brake on excessive consumption. When consumers spend using cash or checking balances, the acute awareness of resource depletion generates immediate visceral pain. However, when consumers experience high psychological ownership over borrowed capital, a paradoxical cognitive decoupling occurs: because the money is already integrated as “theirs,” spending it does not feel like relinquishing external resources, nor does it immediately register as incurring a future repayment obligation. Consequently, the pain of paying is drastically attenuated, precipitating reckless purchasing behavior, overspending, and high debt burdens.
7. Validity
The psychometric validity of the Psychological Ownership of Borrowed Money Scale has been extensively evaluated across experimental, correlational, and longitudinal investigations, confirming robust construct, convergent, discriminant, and predictive validity.
7.1 Construct and Convergent Validity
Construct validity is substantiated by significant, theoretical-aligned correlations with related psychological constructs. The scale demonstrates robust positive correlations with general psychological ownership scales adapted from Pierce et al. (2003) ($r = .68$ to $.74, p < .001$), indicating that the instrument accurately captures the broader genus of ownership feelings within the specific domain of liabilities. Furthermore, the scale correlates positively with debt tolerance ($r = .42, p < .001$), materialistic value orientation ($r = .35, p < .001$), and generalized spending impulsivity ($r = .38, p < .001$). Individuals scoring high on the scale also show higher scores on present-hedonistic time orientation, viewing temporal trade-offs through an immediate-gratification lens.
7.2 Discriminant Validity
Discriminant validity was established through multitrait-multimethod procedures and average variance extracted (AVE) versus shared variance comparisons (Fornell-Larcker criterion). Across empirical validation studies by Sharma, Tully, and Cryder (2021), psychological ownership of borrowed funds was shown to be empirically and conceptually distinct from several established psychological constructs:
- Objective Financial Literacy: The scale shares minimal variance with objective measures of financial knowledge ($r = -.11, p = .08$), demonstrating that treating debt as personal wealth is not simply a cognitive deficit in mathematical calculation or an ignorance of interest rates, but rather a robust socio-cognitive perception.
- Subjective Wealth and Income: Correlational analyses indicate that psychological ownership of borrowed funds is distinct from an individual's actual objective income ($r = .04, n.s.$) and subjective socio-economic status ($r = .09, n.s.$). Wealthy and low-income individuals alike can experience varying degrees of ownership over credit.
- General Risk Aversion: The instrument demonstrates distinctness from generalized financial risk tolerance ($r = .16, p < .05$), confirming that the construct does not merely tap a willingness to take financial gambles.
7.3 Predictive and Nomological Validity
The scale possesses remarkable predictive validity regarding concrete behavioral outcomes. In controlled behavioral experiments, participants who exhibited high scores on the scale displayed:
- Increased Discretionary Spending: In laboratory shopping simulations where participants were allocated real borrowed money, higher scale scores predicted a 34% increase in total expenditure and a significantly higher probability of purchasing luxury items over utilitarian goods ($b = .41, SE = .09, p < .001$).
- Reduced Pain of Paying: Real-time self-report ratings of the emotional distress experienced when parting with borrowed funds confirmed that high psychological ownership strongly buffered against transaction pain ($b = -.48, SE = .11, p < .001$).
- Underestimation of Total Repayment Costs: High scorers systematically underestimated the cumulative, compounding interest cost of borrowing, treating credit financing as functionally equivalent to spending from personal savings ($p < .01$).
- Field Replications: Field research examining consumers utilizing installment loans and point-of-sale financing confirmed that individuals with elevated baseline scale scores were significantly more prone to missed debt payments and loan default over a 12-month observation window ($OR = 1.45, p < .01$).
8. Reliability
The reliability of the Psychological Ownership of Borrowed Money Scale has been corroborated across diverse consumer samples, including representative American adult cohorts, college student populations, and international online convenience panels (e.g., Prolific Academic and Amazon Mechanical Turk).
8.1 Internal Consistency
Across the validation studies conducted by Sharma, Tully, and Cryder (2021), internal consistency metrics systematically met and exceeded conventional psychometric thresholds for behavioral research:
- Cronbach's Alpha ($lpha$): Point estimates for Cronbach's alpha range between $lpha = .86$ and $lpha = .93$ across studies, indicating robust internal homogeneity among scale items without redundant psychometric bloat.
- McDonald's Omega ($\omega$): Because Cronbach's alpha relies on the assumption of tau-equivalence, researchers also calculated McDonald's categorical omega, which yielded values ranging from $\omega = .87$ to $\omega = .94$, verifying exceptional scale reliability under modern congeneric modeling assumptions.
- Item-Total Correlations: Corrected item-total correlations for each scale item routinely exceed $.65$, well above the accepted $.40$ cutoff, confirming that every item contributes meaningfully to the common latent construct.
8.2 Test-Retest Reliability and Temporal Stability
To examine the stability of the scale across time, longitudinal test-retest assessments were executed across multi-week intervals:
- A two-week test-retest assessment among adult consumers yielded an intraclass correlation coefficient (ICC) of $r_{tt} = .79$ ($p < .001$), indicating substantial temporal stability when measured as a generalized baseline trait.
- When manipulated as a state-based reaction in experimental designs (e.g., priming the repayment contract or explicitly highlighting that the funds belong to the bank), the scale demonstrated high sensitivity to situational cues, effectively capturing experimental shifts in perceived ownership while retaining high internal consistency within the manipulated conditions ($lpha > .88$).
9. Factor Analysis
The structural dimensionality of the Psychological Ownership of Borrowed Money Scale has been verified using both Exploratory Factor Analysis (EFA) and Confirmatory Factor Analysis (CFA) across independent respondent cohorts.
9.1 Exploratory Factor Analysis (EFA)
During initial scale development, an exploratory factor analysis using maximum likelihood estimation with Promax (oblique) rotation was conducted on an initial pool of candidate items. Both the Kaiser-Meyer-Olkin (KMO) measure of sampling adequacy ($KMO = .89$) and Bartlett's Test of Sphericity ($\chi^2(28) = 1452.82, p < .001$) confirmed the suitability of the data for factor extraction.
- Scree Plot and Eigenvalues: Analysis of the scree plot and Kaiser's criterion (eigenvalues > 1.0) unambiguously demonstrated a single-factor extraction. The primary factor yielded an eigenvalue exceeding $4.10$, accounting for over $68%$ of the total shared variance among the items. All subsequent factors yielded eigenvalues well below $0.70$, providing definitive evidence against multidimensionality.
- Factor Loadings: Standardized factor loadings across the individual items were high and uniform, ranging from $.72$ to $.89$, with minimal residual variance and no cross-loading anomalies.
9.2 Confirmatory Factor Analysis (CFA)
Subsequent confirmatory factor analyses performed on separate hold-out validation samples validated the single-factor structural specification. Model fit parameters consistently met or exceeded rigorous psychometric benchmarks across all standard fit indices:
- Model Chi-Square: $\chi^2 / df le 2.14$, indicating an acceptable fit relative to degrees of freedom.
- Comparative Fit Index (CFI): Values ranged from $.975$ to $.992$ (exceeding the standard $.95$ threshold).
- Tucker-Lewis Index (TLI): Values ranged from $.964$ to $.988$ (confirming strong relative fit against the baseline null model).
- Root Mean Square Error of Approximation (RMSEA): Values ranged from $.038$ to $.052$ (with the 90% confidence interval spanning $.021$ to $.068$), well within the accepted $.06$ cutoff for superior fit.
- Standardized Root Mean Square Residual (SRMR): Values ranged from $.024$ to $.036$, indicating exceptionally low unexplained correlation residuals.
Measurement invariance testing across demographic sub-populations (e.g., gender, age brackets, and household income tiers) further demonstrated metric and scalar invariance ($\Delta CFI < .01, \Delta RMSEA < .015$), confirming that the scale functions equivalently across diverse socioeconomic strata.
10. Instrument / Measurement Tool
The operational administration of the Psychological Ownership of Borrowed Money Scale is structured as follows:
- Instrument Type: Self-report psychometric rating scale / behavioral survey instrument.
- Administration Format: Paper-and-pencil questionnaire, computer-assisted personal interviewing (CAPI), or self-administered online survey platforms (e.g., Qualtrics, REDCap).
- Item Count: Standard short form consists of 4 to 6 core items (adapted depending on whether measuring generalized borrowing dispositions or evaluating a specific credit product, such as a personal loan, credit card, or BNPL arrangement).
- Response Format: 7-point Likert-type scale, typically anchored from 1 = Strongly Disagree to 7 = Strongly Agree (or semantic differentials anchored from 1 = Not at all mine / Belonging to the lender to 7 = Completely mine / Belonging to me).
- Target Population: Adult consumers (aged 18 and older) who possess active credit accounts, participate in personal borrowing, or are prospective candidates for loan underwriting.
- Completion Time: Approximately 2 to 3 minutes for the core scale.
- Scoring Protocol:
- All items are framed in the affirmative direction (unless specific reverse-coded control items are added by researchers).
- Individual item scores are summed or averaged to create an overall composite psychological ownership index ranging from 1.00 to 7.00.
- Higher mean scores indicate a greater subjective sense of psychological ownership over the borrowed money, reflecting a heightened tendency to treat borrowed capital as personal wealth.
- Lower mean scores indicate that the consumer maintains a clear mental representation of the funds as external liabilities belonging strictly to the lending institution.
11. Permissions & Fee and Test Year
The foundational research documenting the Psychological Ownership of Borrowed Money Scale was published in 2021 in the Journal of Marketing Research by the American Marketing Association (AMA). Below are the practical parameters regarding access, permissions, and operational deployment:
- Test Year: 2021.
- Commercial and Academic Status: The conceptual model and experimental operationalizations were published under academic copyright held by the American Marketing Association (AMA).
- Academic Research Use: For non-commercial academic research, pedagogical use, and scholarly investigation, researchers may reference, adapt, and deploy the construct measurement paradigm freely without payment of royalties, provided that full bibliographic attribution is granted to the original publication (Sharma, Tully, & Cryder, 2021).
- Commercial, Enterprise, or Clinical Applications: Commercial organizations, private consumer credit underwriting bureaus, commercial fintech platforms, and private consultancy practices seeking to embed the scale within proprietary risk algorithms, consumer interfaces, or monetized applications should seek formal licensing approval and clearance from the copyright holder (American Marketing Association / SAGE Publishing) and consult the primary authors.
- Fee: Free for academic and educational non-commercial research; licensing and copyright clearance fees apply for proprietary commercial deployment.
12. References
The theoretical, empirical, and psychometric literature supporting the scale includes the following foundational works:
- Morewedge, C. K., Shu, S. B., Rieskamp, J., Zheng, Y., & Smith, A. (2021). The psychology of ownership. Current Directions in Psychological Science, 30(2), 125–131. https://doi.org/10.1177/0963721420984422
- Pierce, J. L., Kostova, T., & Dirks, K. T. (2001). Toward a theory of psychological ownership in organizations. Academy of Management Review, 26(2), 298–310. https://doi.org/10.5465/amr.2001.4378028
- Pierce, J. L., Kostova, T., & Dirks, K. T. (2003). The state of psychological ownership: Integrating and extending a century of research. Review of General Psychology, 7(1), 84–107. https://doi.org/10.1037/1089-2680.7.1.84
- Prelec, D., & Loewenstein, G. (1998). The red and the black: Mental accounting of savings and debt. Marketing Science, 17(1), 4–28. https://doi.org/10.1287/mksc.17.1.4
- Sharma, E., Tully, S. M., & Cryder, C. (2021). Psychological ownership of (borrowed) money. Journal of Marketing Research, 58(3), 497–514. https://doi.org/10.1177/0022243721993816
- Thaler, R. (1985). Mental accounting and consumer choice. Marketing Science, 4(3), 199–214. https://doi.org/10.1287/mksc.4.3.199
- Thaler, R. H. (1999). Mental accounting matters. Journal of Behavioral Decision Making, 12(3), 183–206.