Shaking Off Burdens – Debt Relief and Moral Intuitions

Abstract

Summary Motivated by the prevalence of debt crises and the resulting policy debates, this study uses a vignette‐based survey to examine the moral intuitions that underlie debt‐related policy preferences. After reading a hypothetical scenario involving a debtor and a lender, survey respondents rate the degree of fairness that they attach to a third party's decision to allow debt relief. The experimental design varies (1) the responsibility of lenders and debtors in terms of whether their situations stem from bad luck or poor choices, (2) the salience of a lender's profit motive and (3) whether the debtor and the lender are individuals or corporations. The results show that debt relief is more likely to be found fair in a corporate context compared to a personalized context and that the factors that drive the perceived fairness of debt relief differ across corporate and personalized contexts. With corporate debt, debtor and lender responsibility are strongly, and consistently, linked to the perceived fairness of debt relief. With personalized debt, lender responsibility is never a significant driver of the perceived fairness of debt relief, and debtor responsibility only matters if the lender's profit motive is made salient.

Debt perceptions: fairness judgments of debt relief for individuals and countries

“…The results with respect to responsibility point to the potential importance of both debtor and lender responsibility in shaping attitudes toward debt relief in the externally relevant contexts of person-bank and international debt. Considering the results identified by Chavanne (2017), the results presented here also suggest that, when it comes to assessing the importance of responsibility, countries in debt are treated like corporations rather than like individuals. Given how invocations of greed are used rhetorically in debt-related policy debates, this effect of profit salience does not call into question whether beliefs about greed drive attitudes toward debt relief.…”

“…Results that integrate the present study and the earlier study Additional results emerge when the results from the present study are integrated with the results from the initial study. Graphs depicting mean fairness ratings for the personalized and corporate contexts across the four responsibility conditions and two profit-salience conditions were not presented by Chavanne (2017). They are therefore included in this analysis's online supplementary appendix ( Supplementary Figures S1 and S2).…”

“…Although the present study and the study described by Chavanne (2017) are the first attempts to analyze public perceptions of debt relief using vignettes, the method used in these studies is commonly used in social science research to examine how judgments respond to changes in social context. In addition to the work cited above involving vignette-based studies of the effect of responsibility on redistributive preferences (Schokkaert & Overlaet, 1989;Schokkaert & Capeau, 1991;Konow, 1996Konow, , 2001Konow, , 2003Konow, , 2009Faravelli, 2007;Gaertner & Schokkaert, 2012;Chavanne, 2016Chavanne, , 2018, vignettes have been used to study topics that include, but are not limited to, how fairness judgments respond to price and wage increases (Kahneman et al, 1986), to alternative resource distributions (Yaari & Bar-Hillel, 1984), to changes in causation and culpability (Alicke, 1992;Hitchcock & Knobe, 2009;Alicke et al, 2011), to changes in criminal sentencing severity (Robinson & Darley, 1995;Carlsmith et al, 2002;Robinson & Kurzban, 2006) and to different degrees of deception (Gneezy, 2005).…”

“…The study presented here was motivated by results of an initial study that used equivalent methods to study moral intuitions toward debt relief across two different social contexts. Chavanne (2017) compared the perceived fairness of debt relief across a personalized debt context – with the lender and debtor being two individuals – and a corporate debt context – with the debtor and lender being two banks. This initial study's results identify a sharp distinction between responses to corporate and personalized debt.…”

“…The experimental design is motivated by four fundamental questions, which are analyzed descriptively in the ‘Results’ section. First, in light of the effects of social context identified by Chavanne (2017), do attitudes toward debt relief in the practical domains of international and person-bank debt follow the patterns of corporate debt relief – where responsibility is a driving force – or personalized debt relief – where norms for promise-keeping instead seem to dominate? Second, does the salience of a lender's profit motive affect the perceived fairness of debt relief in international and person-bank contexts?…”