There are Free Lunches Statement of Intentions

There are Free Lunches: Behavioral Clues to Live Happy in the Economic World is a blog that intends to present updated and relevant information about the "hidden" and only recently uncovered dimensions of the economic science: the behavioral factors. With this blog we intend to promote in Europe and in the rest of the World, the top research articles and perspectives on behavioral economics, decision making, consumer behavior, and general behavioral science. We aim to be followed by journalists, academics, managers, civil servants, and everyone who wishes to improve their daily interaction with the economic world and consequently, their lives' happiness.

Sunday, 4 September 2011

Dissonant Debt (via

A recent US academic study that showed college students feeling “empowered” by student debt has baffled many observers.[1] In an environment of over-indebtedness and increasing joblessness, one would have thought that a student loan would be perceived as a burden. But no, according to researchers at the University of Ohio, the greater the debt the higher college students’ self-esteem. In reality, the perception of the debt load is not counterintuitive at all. If students value the education they receive, it is almost certain that they will view the debt in a positive light too.

People like to keep their beliefs consistent with one another. In earlier posts we have shown how this preference affects gang membership, fidelity in marriage[2] and church-going[3]. The same applies to the student loan: if the students believe that their studies are valuable and worthwhile, it is perfectly consistent that they see an outsized student loan as acceptable. Indeed, the higher the debt, the greater value the student is likely to attach to the education. Any other conclusion would provoke uncomfortable feelings of cognitive dissonance.

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