Heavy Facebook use, higher credit card debt go together
Study finds correspondence between social network and worse credit
By Tony Mecia | Published: October 24, 2012
Does using Facebook cause you to spend money you don't have and to pig out on junk food?
As far-fetched as that might sound, a pair of U.S. marketing professors say they have found a relationship between time spent on Facebook and lower credit scores, higher credit card debt and bigger waistlines. The authors say their work is the first study of its kind to link Facebook to personal financial habits.
The research is among a growing number of studies that are seeking to explain how the use of Facebook and other new technologies is shaping our lives, for better and worse, in areas as diverse as social and civic interactions, commerce and psychological well-being. This month, Facebook said it surpassed 1 billion active users worldwide. About half of U.S. adults say they use at least one social networking site -- twice that of just four years ago.
The researchers, Keith Wilcox of Columbia Business School and Andrew Stephen of the University of Pittsburgh's business school, are not suggesting that people log onto Facebook and then, zombie-like, gorge themselves on debt and Twinkies. Instead, they say, the effects are subtle and cumulative.
The effects are most pronounced, they say, on Facebook users who have strong ties to their online friends. They say the process works like this: People browse through their social network of close friends. Participating in that supportive online community boosts their self-esteem. That brief increase in self-esteem reduces self-control.
People with strong social ties to their online networks and who spent more time on Facebook had, on average, higher credit card debt, lower credit scores and a higher body-mass index (BMI) than those Facebook users with weak social ties and less time on the social network.
"You're feeling better about yourself, you're feeling good and you're more likely to exhibit behaviors that are consistent with lower self-control," Stephen says. "I don't think it's putting you in situations you wouldn't otherwise be in, but on a daily basis, we are making these decisions all the time, and we are being exposed to Facebook all the time."
'Be aware of it'
The findings are based on a series of five surveys and experiments involving hundreds of participants. The researchers' analysis worked to exclude the effect of the sample's age, gender and other demographic information on the results.
Stephen acknowledges that the study does not prove that Facebook use leads to higher debt, lower credit scores and bigger bellies. It could be the other way around: That for some reason, people with those attributes just happen to use Facebook more. But he says the research is still valuable because it helps people understand potential negative consequences to using the world's most popular website.
"It draws attention to the fact that at a broader level, there are potential negative consequences of using social media that people need to be careful about," he says. "It doesn't mean you have to use Facebook less. You just have to be aware of it. ... For someone who has a fair amount of debt or doesn't have a great credit score or credit history and knows they don't exhibit self-control, drawing awareness to this and making it more salient is a good thing."
Wilcox and Stephen's study -- submitted to the Journal of Consumer Research and published online last month -- builds on previous work that has shown that participating in social networks makes people feel better about themselves. Researchers say that's because people receive affirmation and support from their friends, and they share information about themselves that others find witty or entertaining -- while generally filtering out and setting aside negative feelings.
A February 2012 survey found that 85 percent of U.S. adults who use social networks say people are mostly kind on those sites, and two out of three say they have had an experience online that made them feel good about themselves.
In a 2011 study by the Pew Internet & American Life Project, researchers found that Facebook users receive more social support from their networks than non-users. Facebook users also tended to be more trusting, more politically engaged and have more close relationships.
But not everyone is buying the argument that more support and better self-perception lead to overspending and overeating. Deb Aikat, a professor who studies technology issues at the University of North Carolina, says there are too many other factors involved to draw a correlation between Facebook use and debt.
"I do not find a lot of logical links between a Facebook user who has strong ties to their network and having higher credit card debt and lower credit scores," Aikat says. "It's like saying somebody who visits a bar and has good social connections would have higher debt and a lower credit score. There is no causality to it. One doesn't lead to the other."
When new technologies emerge, Aikat says, their effects are often misunderstood -- and overblown. For instance, in the late 1990s, as the Internet was becoming widespread, there was plenty of hand-wringing about how it contributed to a perceived decline in civic participation, as captured in the 2000 book "Bowling Alone: The Collapse and Revival of American Community."
Today, though, it is widely understood that the Internet has enhanced civic participation, Aikat says.
The study points to several areas for future research. Wilcox and Stephen say, for instance, that future studies might consider the effect of Facebook on people's perception of different brand names. And they say it might be helpful to know what specific behaviors -- such as posting status updates about your dog versus merely reading your friends' witty musings -- lead to heightened feelings of self-esteem and reduced self-control.
Even Aikat agrees with that point: "This needs further investigation."
- Rejection of credit card applications rises, New York Fed survey shows – Consumers got turned down for cards at highest rate since 2015, New York Fed survey says ...
- The history of credit cards – From charge plates to Apple Pay, here's a look back at the many iterations of the credit card over the past 150 years ...
- Fed: Card balances jump $7.3 billion in May – Credit card balances continued their sprint toward an all-time high in May, according to the Federal Reserve ...