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Financial shame spirals: How shame intensifies financial hardship

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  • Gladstone, Joe J.
  • Jachimowicz, Jon M.
  • Greenberg, Adam Eric
  • Galinsky, Adam D.

Abstract

Financial hardship is an established source of shame. This research explores whether shame is also a driver and exacerbator of financial hardship. Six experimental, archival, and correlational studies (N = 9,110)—including data from customer bank account histories and several longitudinal surveys that allow for participant fixed effects and identical twin comparisons—provide evidence for a vicious cycle between shame and financial hardship: Shame induces financial withdrawal, which increases the probability of counterproductive financial decisions that only deepen one’s financial hardship. Consistent with this model, shame was a stronger driver of financial hardship than the related emotion of guilt because shame increases withdrawal behaviors more than guilt. We also found that a theoretically motivated intervention—affirming acts of kindness—can break this cycle by reducing the link between financial shame and financial disengagement. This research suggests that shame helps set a poverty trap by creating a self-reinforcing cycle of financial hardship.

Suggested Citation

  • Gladstone, Joe J. & Jachimowicz, Jon M. & Greenberg, Adam Eric & Galinsky, Adam D., 2021. "Financial shame spirals: How shame intensifies financial hardship," Organizational Behavior and Human Decision Processes, Elsevier, vol. 167(C), pages 42-56.
    • Handle: RePEc:eee:jobhdp:v:167:y:2021:i:c:p:42-56
    DOI: 10.1016/j.obhdp.2021.06.002
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    References listed on IDEAS

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    Cited by:

    1. Hilbert, Leon P. & Noordewier, Marret K. & van Dijk, Wilco W., 2022. "The prospective associations between financial scarcity and financial avoidance," Journal of Economic Psychology, Elsevier, vol. 88(C).

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