Debt beyond money: how borrowing triggers our social emotions

— by Maria Brackin

Neither a borrower, nor a lender be;
For loan oft loses both itself and friend,
And borrowing dulls the edge of husbandry.

– William Shakespeare, Hamlet

Suppose that you borrow money from a friend and you promise to repay them soon. Wait, you might be thinking, you would never do this! You would avoid having to borrow—for instance, by saving money, or delaying whatever purchase you were planning. This may be the case, but a majority of people in the world do borrow informally, whether by choice or necessity.

Entertain me for a moment and imagine this is really happening. If the thought of borrowing makes you feel uncomfortable, you’re not alone. In a theoretical, economic sense, borrowing is a straightforward, amoral transaction—the only details that should matter are the willingness of the lender to give you the money, and the terms of repayment. If your friend is offering, and you are confident that you will repay, why worry?

But worry we do. Borrowing can prompt a range of different emotions: relief and gratitude towards the person who is loaning you money, anxiety and guilt about your debt to them, and a gnawing awareness that there is now an imbalance between you. Research suggests that, understandably, informal debt damages social relationships when loans are not repaid, but even the act of borrowing itself has varied outcomes: interpersonal conflict and negative emotions on the one hand; stronger relationships and positive feelings on the other.

Your next thought might be that you need more information: why are you borrowing the money? From which friend? Context is essential, and your emotional reaction will likely depend on what you imagine the situation to be: borrowing from a rich friend feels different than borrowing from a poor friend, and borrowing to meet an urgent need feels different than borrowing to purchase something unimportant.

In our recent paper, Hugo Mercier and I point towards a potential explanation for such emotional reactions. Our core claim is that informal, interpersonal borrowing is not just an economic transaction, but a social interaction. As humans, our cognitive systems are highly attuned to fairness in our social lives—this is why we keep track of how people behave towards us and others, and the consequences of their actions.

When we borrow, we risk not just our wallets but our reputations. The strong feelings that emerge include “social emotions” that have evolved to regulate interpersonal relationships, such as gratitude, guilt, anger and shame. These emotions all respond to the welfare tradeoff ratio (WTR): the costs we feel we should pay to benefit someone else, or the costs we feel they should pay to benefit us. In the case of borrowing:

• A loan that imposes too high a cost on the lender (such as taking money that they have specifically set aside for something else), or delivers too low a benefit for the borrower (such as a frivolous purchase), is indicative of a low WTR and can generate emotions such as guilt (if we are the borrower) and anger (if we are the lender).
• A loan that imposes only a low cost (such as borrowing from someone with money to spare), or delivers a high benefit (such as an essential purchase), suggests a high WTR, causing positive emotions like gratitude.

In a series of online experiments, we asked participants to imagine, as you just did, that they had borrowed money from a friend, or that they had loaned money to a friend. We provide the crucial context outlined above: the costs to the borrower or the benefits to the lender. In the first study, we measured social emotions for both lenders and borrowers, comparing high and low benefits and high and low costs. In the second study, we measured the change in social emotions after contextual information about the loan was revealed. In the third study, we measured social emotions and repayment intention, relative to two potential lenders.

In the first study, we found that people emotionally respond to welfare tradeoffs in interpersonal borrowing scenarios. For a huge majority of participants, emotions tracked the WTR: they anticipated higher negative emotions (guilt, shame, anger) when the benefit to the borrower was low or the cost to the lender was high, and higher positive emotions (gratitude) when the benefit to the borrower was high or the cost to the lender was high.

The second study explored indebtedness in the context of social emotions. We found that negative emotions (guilt) related to borrowing increased significantly more when the benefit of the loan was revealed to be low rather than high, while positive emotions (gratitude) increased more when the benefit was revealed to be high. Indebtedness increased in both situations, suggesting that it can be triggered by increases in either positive emotions or negative emotions.

In the final study, we found initial evidence that welfare tradeoffs influence not just emotions, but actual borrowing choices. When comparing two potential lenders, participants expected to feel more of all the social emotions (both positive and negative) when the lender asked for nothing in return (besides repaying the loan). These stronger emotions were linked to a curious choice: nearly a third of participants preferred to take on a loan from the other lender, who asked for a favor in addition to repayment, presumably to avoid anticipated negative emotions like guilt.

Despite how common informal borrowing is, it is little-studied compared to formal credit from banks or microfinance institutions. More research is needed in this area. Studying a wider range of cultures is particularly important: if borrowing activates our evolved cognitive systems, we would expect to see cross-cultural similarities in emotional responses. Future research might also explore the role of social emotions in formal borrowing. Most of the evidence about emotional reactions to borrowing comes from surveys about bank loans, with people reporting strong feelings that are linked to social context and responsibility. If social emotions also emerge in the context of formal credit, this suggests that social and reputational concern represents an additional, unappreciated element of financial inclusion.

Read the original paper here: Brackin, M., & Mercier, H. (2025). Owing others: debt, welfare tradeoffs, and the social emotions. Evolution and Human Behavior, 46(4), 106690.