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# Owing Others: Debt, Welfare Tradeoffs, and the Social Emotions

Maria Brackin, Hugo Mercier

► To cite this version:

Maria Brackin, Hugo Mercier. Owing Others: Debt, Welfare Tradeoffs, and the Social Emotions. Evolution and Human Behavior, 2025, 46 (4), pp.106690. 10.1016/j.evolhumbehav.2025.106690. hal-05064789

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https://cnrs.hal.science/hal-05064789v1

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# Owing Others: Debt, Welfare Tradeoffs, and the Social Emotions

Maria Brackin

School of Collective Intelligence, UM6P, Morocco

Hugo Mercier

Institut Jean Nicod, Département d'études Cognitives, ENS, EHESS, PSL University, CNRS, Paris, France

Published in *Evolution and Human Behavior*

Non-proofread version.

## Abstract

Borrowing money – whether from informal or formal sources – is a common and fundamental aspect of our economic lives. Although evidence shows that people can exhibit strong emotional reactions to monetary debt, and that these emotions relate to their borrowing decisions, not much is known about which emotions are triggered and why. Here, we use the framework of social emotions to suggest that: (i) social emotions, in particular guilt, gratitude, and indebtedness, emerge in the context of borrowing in response to information about the costs to the lender and the benefits to the borrower, and the Welfare Tradeoff Ratios (WTRs) of both actors, (ii) varying WTRs in debt scenarios elicit the emotional responses predicted by the social emotions framework, and (iii) social emotions are related to borrowing decisions in hypothetical scenarios. We examine the role of social emotions in borrowing in three online studies with U.S. participants. Study 1 (N = 268) shows that social emotions emerge consistently in borrowing scenarios and respond to welfare tradeoffs. Study 2 (N = 190) suggests that the emotion of indebtedness can arise either from increases in guilt or in gratitude. Study 3 (N = 150) shows that people are willing to impose extra costs on themselves when making borrowing choices, presumably to decrease negative emotions. Taken together, the studies suggest that using the social emotions framework helps make sense of emotional responses to debt, and could further our understanding of borrowing and repayment decisions.
# Introduction

Among primates, humans rely on cooperation to an unprecedented extent. This cooperation sometimes takes the form of work undertaken simultaneously, such as cooperative hunting or agriculture. However, at least since Trivers' (1971) classic work on reciprocal altruism, it has been noted that the mutual exchange of benefits is often asynchronous, with one party conferring a benefit on another at time t, and that benefit being (hopefully) reciprocated in the future, at time t+1. Between time t and t+1, the party who received the benefit is, in a sense, in a "debt of reciprocity" (Trivers, 1971, p. 52) towards the party who conferred the benefit. As Trivers noted, there must be psychological mechanisms that make such transactions possible, tracking these "debts of reciprocity;" such mechanisms have since been investigated in depth (e.g. Stevens & Hauser, 2004). In particular, recent work has highlighted the importance of social emotions such as guilt, anger, or gratitude in helping us navigate cooperative interactions (Delton & Robertson, 2016; McCullough et al., 2008; Sznycer et al., 2021; Sznycer & Lukaszewski, 2019). Independently of this line of work, the psychology of monetary debt has also been studied in the context of informal borrowing between friends, and in the context of formal debt, as when borrowing from a bank (Albrecht & Meissner, 2022; Dezső & Loewenstein, 2012; Eckel et al., 2007; Haultain et al., 2010; Helka & Grzyb, 2021; Lee & Persson, 2016).

The goal of the present article is to start bridging work on monetary debt and work in evolutionary psychology on social emotions. We start by briefly reviewing research about debt, and in particular the emotions triggered by informal and formal debt, to highlight the importance of the question, and to show that the framework of social emotions might help explain behaviors related to debt – a question we revisit in the conclusion. We then outline our predictions about the social emotions that should be triggered in the context of debt.

## Emotions and debt

Monetary debt is a massive phenomenon, both at the macro level – it reached over 300 trillion dollars globally in 2022 – and at the micro level: in many societies, debt plays a central role in people's economic lives, enabling large purchases and new business ventures (Davies, 2010; Kindleberger, 2015; Mathias, 2013; Quiggin, 2017; Spufford, 1988; Wray, 1990; Yang, 1971). Formal financial institutions are not the only source of credit, and in many parts of the world, informal borrowing is commonplace: in developing economies, borrowing from friends and family accounts for the same proportion of debt as formal sources (Demirgüç-Kunt et al., 2022). Informal loans typically lack written contracts and have no associated interest payments (Dezső & Loewenstein, 2012), exposing lenders to the risk
of loss from opportunistic borrowers, and borrowers to disproportionate enforcement from lenders. Under these circumstances, why do such transactions emerge, and how is informal borrowing enforced without legal recourse?

Informal loans are conceptualized as a type of “relational contract” in which informal agreements are maintained by the value of future interactions (Baker et al., 2002; Brown et al., 2004; Dezső & Loewenstein, 2012; Gundlach et al., 1995; Sirdeshmukh et al., 2002). Underpinned by trust, such loans rely on the expectation that the lender will return the agreed amount within an acceptable timeframe. In some cases, the benefit for both lender and borrower takes the same form – for instance, “reciprocal lending” involves the provision of a loan from one party to another, followed by provision of a loan by the initial recipient to the other party (Dezső & Loewenstein, 2012). This principle is also the foundation of other, more structured, forms of informal finance such as rotational savings and credit associations (ROSCAs).

Although informal debt can strengthen the relationship between borrower and lender, and is sometimes associated with positive feelings (Dezső & Loewenstein, 2012), it can also generate interpersonal conflict and negative emotions (Angulo et al., 2024; Wherry et al., 2019). Unsurprisingly, defaulted loans constitute a violation of trust and damage social relationships (Angulo et al., 2024; Wherry et al., 2019), but even the act of borrowing itself is accompanied by social awkwardness (Wherry et al., 2019), embarrassment and discomfort (Dezső & Loewenstein, 2012). In part because of these social and emotional costs, many individuals prefer formal to informal loans (Lee & Persson, 2016). However, formal borrowing is not exempt from strong emotions, which have also been associated with debt from financial institutions. These emotions are sometimes characterized simply as negative responses to debt (fear [Callender & Jackson, 2005; Haultain et al., 2010; Nguyen et al., 2021] or discomfort [Almenberg et al., 2021]), or are linked with a particular debt behavior, such as shame and the over-use of credit (Engel & Pedersen, 2019; Hayes, 2000).

However, not all formal borrowers experience negative emotions: some survey respondents view formal debt neutrally, as a normal part of life, or even positively, as helpful for achieving their goals (Helka & Grzyb, 2021; Pew, 2015).

Emotional responses to borrowing are likely related to the perception of lending and borrowing by third parties. Community norms might pressure lenders into giving more money than they would otherwise offer (Dezső & Loewenstein, 2012), or borrowers into repaying money that the lender did not expect to have ever been returned (Morvinski & Shani, 2022).

Formal debt is also the subject of moral judgment (Graeber, 2012), and scrutiny of borrowers is associated with monitoring and enforcement by third parties: in field studies of microcredit,
community members who are not directly involved with lending or borrowing are willing to discourage borrowing and enforce debt repayment through shame and ostracism (Engel & Pedersen, 2019; Hornig, 2019). Certain forms of formal lending, such as joint-liability loans, are so strongly enforced by social pressure that other collection methods are rarely needed (Haldar & Stiglitz, 2016; Stiglitz, 1990).

Given the social context and consequences of borrowing, and the emotions typically observed, responses to both informal and formal debt are likely to be dominated by social emotions, such as shame and guilt. Moreover, although it appears that the emotions associated with debt are predominantly negative, they are not uniformly or universally negative. To understand why debt might trigger strong emotions – in particular social emotions – and which type of debt triggers which emotion, we turn to the evolutionary perspective on social emotions.

## *The evolutionary perspective on social emotions applied to informal debt*

It has recently been suggested that one indicator plays a major role in helping us navigate social life: the Welfare Tradeoff Ratio (WTR). The WTR is an internal indicator of the relative weight we put on our own welfare compared to that of another individual. As such, the WTR informs various decisions, in particular decisions about whether we would be willing to trade off our own personal welfare for someone else's welfare (for an introduction, see Delton & Robertson, 2016). Formally, we should be willing to trade off our own personal welfare for that of some other individual when the following inequality is satisfied:

$$WTR \times \text{benefit to the other} > \text{cost to us}$$

For example, suppose we get the opportunity to buy a rare book that we think a friend of ours would like. We should be willing to pay the cost (buy the book) if it is lower than the benefit of the book to our friend, multiplied by our WTR towards them. If our WTR is 1, we treat our friend's benefits as if they were our own; if it is 0, we are never willing to pay a cost to grant them a benefit.

WTRs help make sense of the “debts of reciprocity” Trivers described. For instance, we would help a friend move if the cost of helping them is inferior to the benefits of helping times our WTR towards them. In turn, our WTR towards our friend will be informed by whether they reciprocate later on, or by other relevant behaviors indicating their willingness and
ability to provide us with benefits (Delton et al., 2023; Delton & Robertson, 2016; Burnette et al., 2012; McCullough et al., 2014; Petersen et al., 2012).

By contrast, the case of a formal debt does not necessarily require computations based on WTRs: a financial institution such as a bank takes a calculated risk, which is compensated by interest paid on the principal. The bank doesn't compute a WTR towards us; instead, it computes the odds that we will default (in addition to other factors such as inflation, etc.). Likewise, our decision to take on, or to repay, a debt to the bank doesn't have to be informed by our WTR towards the bank, but instead by practical considerations such as how much we expect to benefit from the loan, whether we can repay it, and the consequences of not repaying. In spite of this, as noted above, formal debts seem to sometimes trigger social emotions.

Informal monetary loans share some similarities with formal loans: usually, there is an expectation of exact repayment, which is not the case for other reciprocal interactions. If, for instance, we help a friend move, they don't have to reciprocate by moving exactly as many boxes or pieces of furniture – they can help us in other ways. However, by contrast with formal loans, in a loan between friends there is typically no expectation that interest will be paid. Moreover, we interact with a human individual instead of an impersonal institution.

How should WTRs influence decisions in the case of informal loans? If we assume that the loan will be repaid, the benefits to the borrower can take several forms: merely enjoying a benefit earlier (e.g. the borrower gets to see a movie now rather next month, when they would have had enough money to see it without the loan), enjoying a benefit for longer (e.g. they get to use a guitar one month earlier, enjoying one extra month of benefits), or enjoying a benefit they would not be able to enjoy later on (e.g. if a band plays in town this month but not later). The cost to the lender is the opportunity cost: the other uses they could have made of the money they loaned, in the time during which it has been loaned. These costs take a similar form to the lender's benefits: they could reflect earlier consumption, taking advantage of a unique opportunity, etc. but they can also be very close to zero if the lender is not short on available funds. As in the general case, the lender should lend the money if their cost (here, opportunity cost, as we assume the money will be repaid) is lower than the benefits to the borrower times the WTR of the lender towards the borrower:

$$ \text{Cost to the lender} < \text{Benefit to the borrower} \times \text{WTR} \text{ (lender to borrower)} $$

Borrowers should ask to borrow money if their benefits are higher than the cost to the lender times their WTR towards the lender:
Benefit to the borrower > Cost to the lender x WTR (borrower to lender)

However, this isn't the only way in which WTRs inform borrowing decisions. Our perception of others' WTR towards us, and others' perception of our WTR towards them, give rise to a variety of social emotions, such as guilt, anger, shame, and gratitude (e.g., Sznycer et al., 2021; Sznycer & Lukaszewski, 2019), emotions which could in turn influence decisions related to debt. We now describe the most relevant emotions and derive hypotheses about how these emotions should be triggered in the context of informal loans.

Guilt is a negative emotion that motivates either avoidance of a given behavior, to prevent punishment, or reparations after someone has engaged in a problematic behavior, to repair damaged relationships. Guilt emerges when we realize we have placed too little value on the welfare of another, i.e. when we believe someone thinks our WTR towards them is insufficiently high (Sznycer, 2019). The function of guilt is to recalibrate what the other person thinks our WTR towards them is by demonstrating that we value their welfare appropriately (Baumeister et al., 1994; Leith & Baumeister, 1998; Sznycer et al., 2021). In the context of debt, people should infer that a lender has a low WTR towards the borrower when the lender imposes a relatively large cost on the borrower, or when the borrower receives a relatively small benefit from the loan – these perceptions should elicit feelings of guilt. This is true both when the loan is expected to be repaid as well as if the borrower defaults. A borrower who feels guilty should be more motivated to repay an outstanding loan, but may also avoid borrowing in the first place to prevent feeling guilty.

Within the framework of social emotions, the function of anger is to bargain for better treatment for oneself, and this emotion emerges when we feel others have an insufficiently high WTR towards us (or someone we care about) (Sell, 2011; Sell et al., 2009, 2014; Sznycer et al., 2022). Studies show that people become angry when high costs are imposed on them, relative to the benefits gained by the party imposing the cost (which is indicative of a low WTR towards them), and when the costs are imposed intentionally (Sell et al., 2017). In the context of informal loans, there should be, as a rule, little or no anger so long as the loan is expected to be repaid, to the extent that the lender freely consented to the loan. However, anger should be expected if the loan is not repaid, as a function of how low the lender estimates the WTR of the borrower towards them to be. This estimate should be based on the perceived costs to them, and benefits to the borrower of the loan (as detailed above), as well as on whether the default was intentional (a factor we do not manipulate in our studies).
Shame, by contrast with guilt, responds primarily to publicity and to the threat of social devaluation by others (Sznycer et al., 2016). The function of shame is to contain the spread of negative information about oneself (e.g., Fessler, 2004; Gilbert, 1997), and it is triggered by information about (actual or anticipated) social devaluation (e.g., Robertson et al., 2018). In the context of debt, to a degree, shame might track guilt: imposing large costs on a friend for a small benefit to oneself is not a desirable quality. However, shame might also respond to elements besides WTRs. For instance, the very act of borrowing (or, worse, one's inability to repay) might be perceived as an indication that someone is facing hardship, which might make others perceive them to be a less viable social partner, leading to shame. Moreover, feelings of shame should be more strongly related than feelings of guilt to the public character of the debt.

At least one positive emotion could also be triggered by debt: gratitude. Gratitude can be thought of as the emotion we feel when someone has a higher WTR towards us than we believed they did, leading us to potentially increase our WTR towards them (a sketch of this view is already present in Trivers, 1971). It should then follow that feelings of gratitude are proportional to the cost-benefit ratio of the prosocial act that triggered them: if someone incurs a substantial cost to provide us with a small benefit, this suggests they have a high WTR towards us, and that we should feel more grateful. However, studies have shown that people tend to feel more grateful when they receive high rather than low benefits (Karabegovic et al., 2024; Okamoto & Robinson, 1997; Tesser et al., 1968). This is compatible with other evolutionary perspectives on gratitude (McCullough et al., 2001, see also Algoe et al., 2013; A. Smith et al., 2017; Tsang, 2006a), which conceptualize gratitude as an emotion that enables long-term reciprocal interactions, rather than short-term tit-for-tat. In long-term interactions, the provision of actual benefits matters more than the demonstration of one's willingness to provide benefits. Both perspectives agree on the fact that high costs paid to provide benefits should elicit more gratitude, which has also been experimentally shown (e.g., Karabegovic et al., 2024). Given these results, we predict that borrowers should feel more grateful when they receive a larger benefit, or when they impose a larger cost on the lender.

Finally, another emotion is highly relevant in the context of debt: indebtedness. Indebtedness has been studied in the context of the emotions discussed above, but not, to the best of our knowledge, within an evolutionary framework (Gao et al., 2023; Oishi et al., 2019; Peng, 2020; Peng et al., 2018; Tsang, 2006; Watkins et al., 2006). Studies of indebtedness have attempted to isolate it from gratitude; whereas gratitude is a positive feeling resulting in proximity-seeking, indebtedness is a negative feeling of discomfort that primarily motivates
repayment to restore the temporary imbalance between borrower and lender (Peng, 2020; Peng et al., 2018). The more distinct it is from gratitude, the more indebtedness has a negative valence and prompts avoidance. Much of this dynamic hinges on the (perceived) expectation of the other party, which may change indebtedness from a feeling of gratitude into a sense of obligation (Peng et al., 2018; Watkins et al., 2006). One study of indebtedness suggested it was a “mixed emotion” combining guilt, gratitude, and obligation to repay (Gao et al., 2023). While indebtedness likely motivates repayment, its responsiveness to WTRs is unclear: while indebtedness should increase when a higher cost is exerted on the lender, it’s not clear whether people feel more indebted when they receive a high benefit (which should increase gratitude), or a low benefit (which should increase guilt).

In many of these cases, the relevant computations bear not over WTRs directly, but over estimations of others' WTRs (as in the case of anger), estimations of others' estimations of our WTR (as in guilt, which should track other people's estimation of our WTR towards them), or even higher level constructs (as when we anticipate that someone would feel guilty if they behaved in a given way). We do not assume that people are perfectly able to perform such complex computations, only that they are good enough as to be, at least, directionally responsive to variations in the costs and benefits of various behaviors.

Our goal here isn't to study exhaustively the factors that affect social emotions in the context of informal debt, but to focus on the role of WTRs. Given the considerations above, we make the following predictions, assuming all else is equal except for manipulations to costs or benefits: Borrowers should feel more guilty and more ashamed, and lenders more angry, when the costs to the lender are high and the benefits to the borrower are low. Borrowers should feel more grateful when they receive high benefits and when the lender incurs high costs. Borrowers should feel more indebted when the costs incurred by the lender are high. It is not clear how indebtedness should respond to variations in the benefits to the borrower. Except for anger, which should mostly apply if a loan hasn't been repaid, the other emotions should react similarly to costs and benefits in the case of loans that are expected to be repaid and loans that haven't been repaid (i.e. even if the specific costs and benefits are different, the directions of the effects should be the same).

## The present experiments

The goal of this paper is twofold: First, we test whether the theory of social emotions grounded in WTRs applies to the context of informal debt. Second, we test whether the theory of social emotions helps us better understand indebtedness, as well as borrowing and
repayment behavior. Rather than directly manipulating WTRs through monetary trade-offs, our vignettes consider benefits (utility) and costs (opportunity costs in particular) in excess of the monetary amount exchanged. To make it easier to measure the effects of changes in benefits and in costs, respectively, we do not manipulate them simultaneously.

Study 1 tests whether social emotions (anger, guilt, shame, and gratitude) respond as predicted in the context of debt, when the relevant parameters (costs to the lender or benefits to the borrower) are manipulated. Study 1 also examines how indebtedness changes in relation to the same parameters, and in what circumstances borrowers are most willing to repay loans.

Motivated by associations found in Study 1 between guilt, gratitude and indebtedness, Study 2 tests the idea that indebtedness can be triggered either by guilt or by gratitude. By providing new information to participants about the benefits derived from a loan, we selectively increase how guilty or how grateful they feel for borrowing money, and test whether either of these increases triggers an increase in indebtedness – which is what we observe. This provides evidence for indebtedness as a hybrid emotion.

If the theory of social emotions is correct, one of the functions of guilt is to motivate an individual A to pay a cost (a form of reparation) so that another individual (or individuals) B do not think A has an overly low WTR towards them. To avoid later reparations, A might chose to pay a smaller upfront cost, to signal their high WTR towards B. In the context of informal loans, that means that a borrower might prefer to pay a (non-monetary) cost to the lender when taking on a loan, signaling their high WTR towards them and reducing potential feelings of guilt and the desire to pay a higher cost later to assuage that guilt. Study 3 tests this hypothesis.

## Study 1

Study 1, consisting of Study 1a and Study 1b, tests whether emotional reactions to monetary debt respond to WTRs in the way predicted by the evolutionary framework reviewed above, reacting to the costs and benefits associated with borrowing.

We make the following hypotheses for Study 1a:

When the benefits to the borrower are low, participants expect the borrower to feel guilty and ashamed, and the lender to feel angry.
When the benefits to the borrower are high, participants expect the lender to feel grateful.

We also ask two research questions in Study 1a, relating to indebtedness and its associated action, repayment:

When the benefits to the borrower are low, do participants expect the borrower to feel indebted?

Do participants prefer to repay a loan for which the benefits to them are low, or a loan for which the benefits to them are high?

We make the following hypotheses for Study 1b:

When the costs to the lender are high, participants expect the borrower to feel guilty, ashamed, grateful, and indebted, and the lender to feel angry.

Participants prefer to repay a loan for which the cost to the lender is high, rather than a loan for which the cost to the lender is low.

The full hypotheses, sample size, materials, and analyses for Study 1 were pre-registered at https://osf.io/sezjg/.

## Methods

In two experiments, we presented participants with a simple scenario about borrowing money from, or lending money to, a friend. In Study 1a, we asked participants whether a borrower would feel more grateful, guilty, ashamed, and indebted, and whether a lender would feel angrier, in a situation in which the borrower had received a high benefit from the loan (e.g. fixing prescription glasses), or one in which they had received a low benefit (e.g. buying sunglasses). In Study 1b, we asked whether a borrower would feel more grateful, guilty, ashamed, and indebted, and whether a lender would feel angrier, in a situation in which the lender had paid a high cost because of the loan (e.g. forgoing buying concert tickets), or one in which they had paid a low cost (e.g. they had money to spare). In all the situations, the monetary value of the loan was kept constant.

## Participants
We recruited 268 U.S. participants ($M_{age} = 41.6, SD = 12.5, 50.0\%$ female) on the Prolific Academic platform (135 in Study 1a, 133 in Study 1b). The sample size achieved 80% power for an effect size $h = 0.3$ and $\alpha = 0.8\%$. Two participants were excluded because they incorrectly answered an attention check question at the end of the study.

## Design

Each participant was asked to answer a series of questions about feelings of gratitude, guilt, shame, indebtedness, and anger, as a function of whether a loan led to high or low benefits to the borrower (Study 1a), or high or low costs to the lender (Study 1b). Each participant was put either in the position of a borrower or of a lender (if the former, they were also asked about willingness to repay the loan). Each participant was presented with three sets of questions comparing hypothetical situations, relating to each of the social emotions. The questions contrasted either a high benefit to a low benefit (to the borrower), or a high cost to a low cost (to the lender). In both studies, answers were categorized as “high” if a participant chose situations with a high benefit to the borrower (Study 1a) or high cost to the lender (Study 1b) for a majority of questions (i.e. at least two of the three questions), and “low” if they chose situations with a low benefit (Study 1a) or cost (Study 1b) for a majority of questions.

## Materials

In Study 1a, participants were presented a scenario from the perspective of either a borrower or a lender. Participants who took the perspective of a borrower read:

> Suppose you borrow $50 from a friend, whom you've known for a few months, and see occasionally. You tell your friend that you will repay them at the end of the next month.

These participants were then asked about their emotional responses to different borrowing scenarios pertaining to benefits to themselves, presented as three pairs of binary options (all the stimuli are available in the Supplementary Information). They had to pick one situation in each pair of options for which they had the stronger emotional response.

For instance, participants in Study 1a taking the perspective of a borrower were asked:

> In which situation would you feel more **grateful**?

> **Situation 1:** The money is for buying sunglasses, since your friends have planned a trip to the beach.
**Situation 2:** The money is for fixing your prescription glasses, since you just broke them and cannot read without glasses.

These participants were then asked to choose between the same two situations in the context of other social emotions:

In which situation would you feel more **indebted**?

If you didn't pay your friend back, in which situation would you feel more **guilty**?

If you didn't pay your friend back, in which situation would you feel more **shame**?

They were also asked to choose between the two situations in relation to the anticipated anger of the lender:

If you didn't pay your friend back, in which situation would they feel more **angry**?

Finally, participants were asked to choose, considering the same pair of situations, which of the two loans to repay first:

Suppose you borrowed $50 each from two friends, whom you've known for a few months, and see occasionally, but cannot repay both of them. You are trying to decide which loan to pay back first.

Which of the following loans would you **repay** first?

Participants taking the perspective of a lender in Study 1a read the same scenario from a different angle:

Suppose you loan $50 to a friend, whom you've known for a few months, and see occasionally. Your friend tells you that they will repay you at the end of the next month.

These participants were then asked about the anticipated emotional responses of the borrower to whom they loaned the money, comparing the same pairs of situations described above. For instance, they were asked:

In which situation would your friend feel more **grateful**?

**Situation 1:** The money is for buying sunglasses, since their friends have planned a trip to the beach.
**Situation 2:** The money is for fixing their prescription glasses, since they just broke them and cannot read without glasses.

These participants were also asked corresponding questions about the borrower's guilt, shame, and indebtedness, and about their own anger (as a lender). No questions about repayment were included for participants taking the perspective of a lender.

Study 1b had exactly the same design as Study 1a, except that participants were asked to choose between two situations that varied in the costs to the lender (high or low).

Participants taking the perspective of a borrower in Study 1b read the basic scenario described above, and were asked about their emotional responses to different borrowing situations, pertaining to costs incurred by the lender. For instance, these participants were asked:

In which situation would you feel more **grateful**?

**Situation 1:** The friend who loaned you the money recently received a bonus at work, and so has money to spare.

**Situation 2:** The friend who loaned you money had put that money aside to go see a concert with their partner.

They were also asked, comparing the same pairs, in which situation they would feel more guilty, ashamed, and indebted, and in which situation the lender would feel more angry. Participants taking the perspective of a borrower were also asked which of the two loans they would repay first.

Participants taking the perspective of a lender in Study 1b read the basic scenario from a lender's perspective, and were then asked about the anticipated emotional responses of the borrower to whom they loaned the money, comparing the same pairs of situations.

For instance, participants in the lender perspective were asked:

In which situation would your friend feel more **grateful**?

**Situation 1:** Your friend found out that you recently received a bonus at work, and so have money to spare.
**Situation 2:** Your friend found out that you had put that money aside to go see a concert with your partner.

They were also asked corresponding questions about the borrower's guilt, shame, and indebtedness, and about their own anger (as a lender). No questions about repayment were included for participants taking the perspective of a lender.

In both studies, each participant was asked to make choices between three pairs of situations, for each of the social emotions. After the main task, participants were asked an attention check question that required them to read a brief paragraph and find hidden instructions. Participants incorrectly answering the attention check question were excluded from analysis, following the pre-registered analysis plan.

## Results

### Independent manipulation check

To confirm that our manipulation of costs and benefits was successful, we conducted a separate study in which participants answered questions about the situations used in Study 1a and Study 1b. We recruited 79 U.S. participants ($M_{age} = 41.6$, $SD = 12.6$, 50.6% female) on the Prolific Academic platform.

Half of the participants were asked about benefits (using the pairs of situations in Study 1a), and half about costs (using the pairs of situations in Study 1b). Participants were assigned to take either the perspective of a borrower or of a lender.

In the manipulation checks for Study 1a (benefits to the borrower), participants taking the perspective of a *borrower* were asked “How would you assess the benefit for you of borrowing the money in these scenarios?” and participants taking the perspective of a *lender* were asked “How would you assess the benefit for your friend of borrowing the money in these scenarios?”

In the manipulation checks for Study 1b (costs to the lender), participants taking the perspective of a *borrower* were asked “How would you assess the cost for your friend of lending the money, in terms of what they are giving up, in these scenarios?” and participants taking the perspective of a *lender* were asked “How would you assess the cost for you of loaning the money, in terms of what you are giving up, in these scenarios?”

The results validate our manipulation of costs and benefits. A strong majority of participants who were asked about benefits correctly identified the intended high benefit items: fixing
prescription glasses (100%), repairing a broken refrigerator door (99%), and buying a bus ticket to visit a sick grandmother (85%). Likewise, participants who were asked about costs correctly identified the intended high cost items: the lender giving up a concert (87%), a weekend away (90%) or a restaurant meal (72%) with their partner.

## Confirmatory analyses

All statistical tests are binomial tests. Results were tested at $\alpha = 0.8\%$ according to the Bonferroni correction. **Figure 1** depicts the number of responses falling into the “high” and “low” categories for both Study 1a and Study 1b.

In Study 1a (benefits to the borrower), all the hypotheses were verified: 83% of participants expected a borrower to feel more guilty ($p < 0.001$) and 84% expected them to feel more ashamed ($p < 0.001$) when the benefit to the borrower was low; 91% of participants expected a lender to feel more angry when the benefit to the borrower was low ($p < 0.001$); 97% of participants expected a borrower to feel more grateful when the benefit to the borrower was high ($p < 0.001$). Answering our first research question, 80% of participants expected a borrower to feel more indebted when the benefit to the borrower was high ($p < 0.001$). Answering our second research question, 42% of participants taking the perspective of a borrower chose to repay a loan for which the benefit to them was high ($p = 0.93$).

In Study 1b (costs to the lender), all the hypotheses were verified: 91% of participants expected a borrower to feel more guilty ($p < 0.001$), 91% expected them to feel more ashamed ($p < 0.001$), and 97% expected them to feel more grateful ($p < 0.001$) when the cost to the lender was high; 92% of participants expected a lender to feel more angry when the cost to the lender was high ($p < 0.001$); 80% of participants expected a borrower to feel more indebted when the cost to the lender was high ($p < 0.001$). 92% of participants taking the perspective of a borrower chose to repay the loan for which the cost to the lender was high ($p < 0.001$).

All hypotheses could be independently verified for participants taking the perspective of a borrower and those taking the perspective of a lender.

**Figure 1**
<figure><img src="image_3.png" /><figcaption>**Figure 1.** Left panel (Study 1a): Percentage of participants who tended to answer that they would feel more of each emotion (or be more willing to repay the loan) when the benefits to the borrower were high (black bars) or low (light bars). Right panel (Study 1b): Percentage of participants who tended to answer that they would feel more of each emotion (or be more willing to repay the loan) when the costs to the lender were high (black bars) or low (light bars).</figcaption></figure>

## Exploratory analyses

In both studies, participants were presented with three pairs of scenarios, and we measured their overall preference for low or high benefits (Study 1a) or costs (Study 1b). However, to better understand the associations between (i) emotions and repayment choices, and (ii) social emotions and indebtedness, we measured the percentage of exact matches in the binary choices between the pairs of *individual situations* for each question, e.g. whether fixing prescription glasses (Situation 1) or buying sunglasses (Situation 2) was chosen both for the question about gratitude, and for the question about repayment. The results presented below relate only to Study 1a (benefits to the borrower) because here we did not have clear predictions about emotions and repayment, or about the nature of indebtedness (analyses for Study 1b, and paired t-tests testing for any significant differences in the matching rates, are included in the Supplementary Information).

To explore the contribution of different emotions to repayment intention, we compared the number of situation matches between gratitude and repayment, guilt and repayment, and indebtedness and repayment. In Study 1a, participants chose, on average, the same situations for indebtedness and repayment 57.2% of the time, for gratitude and repayment 60.7% of the time, and for guilt and repayment 45.3% of the time. This suggests that
repayment is associated with all three emotions, and most strongly associated with indebtedness and gratitude.

Considering the relationship between guilt, gratitude and indebtedness, we found that participants in Study 1b (costs to the lender) felt more guilty, grateful, and indebted when the cost to the lender was high. However, in Study 1a (benefits to the borrower), although most participants expected the borrower to feel more indebted when the benefit to the borrower was high, 20% felt more indebted when the benefit to the borrower was low. We compared the number of situation matches between guilt and indebtedness, and gratitude and indebtedness, finding that participants chose, on average, the same situations for indebtedness and guilt 32.2% of the time, and for indebtedness and gratitude 60.7% of the time. This suggests that, in the context of informal debt, indebtedness can be associated with either guilt or with gratitude, though most strongly associated with gratitude.

## Discussion

In line with our hypotheses, emotional responses to debt – including guilt, shame, anger and gratitude – were well predicted by the evolutionary framework of social emotions. The exploratory analysis suggested that indebtedness could be associated with either guilt or gratitude, but that it might be more strongly related to gratitude. The results of two previous versions of Study 1, which did not sufficiently specify the nature of the relationship between the lender and the borrower, can be found in the Supplementary Information. They are nearly identical to the results of Study 1, except for an earlier version of Study 1a in which indebtedness was more evenly associated with guilt and with gratitude.

## Study 2

Study 1 suggests that feelings of indebtedness can potentially be related either to feelings of guilt or of gratitude. In Study 2, we test whether feelings of indebtedness can increase when either feelings of guilt or feelings of gratitude increase. Manipulations of benefits to the lender are particularly relevant in this respect, since they evoke different reactions: low benefits to the lender evoke feelings of guilt, and high benefits evoke feelings of gratitude. We thus predict that people can feel more indebted both when the benefits to the lender decrease, and when they increase. To test this prediction, participants were put in a situation similar to that of the borrower in Study 1, and they were asked about their feelings of guilt, gratitude, and indebtedness in relation to borrowing. Participants were then provided with additional information about the benefits they derived from the loan, and asked to say
whether their emotions changed on the basis of this new information (for a similar design, see Sell et al., 2017). There is another minor difference with Study 1: to test the robustness of the guilt measure, we asked both about the guilt of merely borrowing the money, and the guilt of not repaying the loan.

We make the following hypotheses for Study 2:

Guilt – to borrow money, or to not repay it – increases more when the borrower derives a low benefit than a high benefit.

Gratitude increases more when a borrower derives a high benefit than a low benefit.

Indebtedness increases both when the borrower derives a low benefit, and when the borrower derives a high benefit.

The hypotheses, sample size, materials, and analyses of Study 2 were pre-registered at https://osf.io/sezjg/.

## Methods

### Participants

We recruited 190 U.S. participants ($M_{age} = 32.6$, $SD = 11.1$, 49.7% female) on the Prolific Academic platform. The sample size achieved 80% power for an effect size $d = 0.5$ and $\alpha = 0.1$. Three participants were excluded because they incorrectly answered an attention check question at the beginning of the study.

### Design

Each participant was presented with a scenario in which they borrow money from a friend. After answering an initial set of questions about feelings of guilt (to borrow and if the loan were not repaid), gratitude, and indebtedness, participants were told either that they derived a particularly high benefit from the loan, or a particularly low benefit from the loan. They then answered questions about the change in these emotions as a function of the benefit received. Each participant answered questions about one hypothetical loan (selected at random from six possible scenarios with superficial differences).

### Materials

Before the main task, participants were asked an attention check question that required them to read a brief paragraph and find hidden instructions. Participants incorrectly
Knowing this, how **indebted** do you feel towards your friend?

Participants answered these questions on a scale of -3 (much less) to +3 (much more): -3 *much less*, -2, -1, 0 *the same*, +1, +2, +3 *much more*.

## Results

### Confirmatory analyses

All statistical tests are t-tests. For both hypotheses about guilt, and the hypothesis about gratitude, we used one-sided independent samples t-tests; for the two hypotheses about indebtedness, we used one sample t-tests. Results were tested at $\alpha$ = 1% according to the Bonferroni correction. **Figure 2** depicts the change in each social emotion after information is revealed about the benefits derived.

As predicted by the hypotheses about guilt, participants in the low benefit condition reported a larger increase in guilt to borrow (*GuiltBorrow*<sub>low</sub> = 1.30, SD = 1.41) and guilt to not repay (*GuiltRepay*<sub>low</sub> = 1.95, SD = 1.26) than participants in the high benefit condition (*GuiltBorrow*<sub>high</sub> = -0.26, SD = 1.44, t = 7.45, p < 0.001; *GuiltRepay*<sub>high</sub> = 1.34, SD = 1.49, t = 3.0, p < 0.01).

As predicted by the hypothesis about gratitude, participants in the high benefit condition reported a larger increase in gratitude (*Gratitude*<sub>high</sub> = 1.82, SD = 1.25) than participants in the low benefit condition (*Gratitude*<sub>low</sub> = 0.89, SD = 1.36, t = 4.84, p < 0.001).

As predicted by the hypotheses about indebtedness, participants in the low benefit condition reported an increase in indebtedness greater than zero (*Indebtedness*<sub>low</sub> = 1.10, SD = 1.21, t = 8.78, p < 0.001), and participants in the high benefit condition reported an increase in indebtedness greater than zero (*Indebtedness*<sub>high</sub> = 1.16, SD = 1.22, t = 9.19, p < 0.001).

**Figure 2**
<figure><img src="image_4.png" /><figcaption>**Figure 2.** Change in each emotion based on whether a higher or lower benefit was received, in Study 2. Positive scores indicate an increase in the emotion after participants learn that they have received a particularly high or low benefit. The scale used ranged from -3 (much less) to +3 (much more), with zero (the same) as the middle point. The boxes in the plot depict the interquartile range of responses, while the whiskers indicate the lowest and highest response values. Dots represent outliers. The horizontal lines are the median response values, and the circles are the mean response values.</figcaption></figure>

## Discussion

In line with our predictions, social emotions consistently changed based on the benefits received by the lender. Guilt increased more when the borrower received a low benefit than a high benefit, while gratitude increased more when the borrower received a high benefit than a low benefit. Indebtedness increased with both a low benefit and a high benefit, suggesting that guilt and gratitude can both trigger feelings of indebtedness.

## Study 3

Study 1 shows that when the costs to the borrower increase, participants feel more guilty, grateful, and indebted. Even though gratitude is a positive emotion, people shouldn't strive to be in situations in which they feel grateful, because requiring help puts an individual in the awkward position of imposing on others. Guilt is a negative emotion, which people should seek to avoid, for instance by not taking on loans when the costs to the lender are high. Although this seems quite commonsensical, there is a less trivial corollary which we explore in Study 3. One way for the lender to reduce the net cost, to them, of the loan is to make the
loan conditional on the granting of a non-monetary favor. This favor is a net cost for the borrower. However, some borrowers might prefer to pay an upfront cost in order to increase their perceived WTR towards the lender, and therefore dampen the negative emotions associated with borrowing. The first hypothesis tested here is equivalent to those tested in Study 1:

> If no extra cost is required for the loan, participants expect to feel more guilty, grateful, and indebted.

We also predict that some participants would be willing to pay a higher cost to avoid situations in which they feel more negative emotions:

> Some participants will choose the lender who imposes an extra cost for the loan.

The hypotheses, sample size, materials, and analyses of Study 3 were pre-registered at https://osf.io/sezjg/.

## Methods

### Participants

We recruited 150 U.S. participants ($M_{age} = 42.0, SD = 12.5, 50.0\%$ female) on the Prolific Academic platform. The sample size achieved 80% power for an effect size $h = 0.28$ and $\alpha = 0.1$. One participant was excluded because they incorrectly answered an attention check question.

### Design

Each participant was presented with a scenario (selected at random from three possible versions) in which they need money and have the option of borrowing from one of two friends. One friend offers the money with no extra cost, and the other friend asks for a specific favor in return (selected at random from three possible favors). Participants were asked to answer questions about their emotions (gratitude, guilt, and indebtedness) towards the lenders. They were also asked to choose which lender they would be most likely to borrow money from.

### Materials

Before the main task, participants were asked an attention check question that required them to read a brief paragraph and find hidden instructions.
Participants were presented with one of three possible scenarios (see Supplementary Information). For example:

Suppose you need $50 to buy a bus ticket to visit your grandmother. You won't have enough money until the end of the month and in the meantime you are worried about her serious illness.

The vignette continues:

You describe the situation to a close friend, and you tell them that you will repay the money at the end of the next month.

Unfortunately, they can't help you themselves but, with your approval, they mention the situation to two mutual friends, who would both be willing to loan you the money.

Participants then saw information about the two lenders, selected from three possible versions (different lender names and different favors asked in return), and with lender order counterbalanced (see Supplementary Information for full stimuli):

**John** is willing to loan you the money. He would like you to pay him back when you are able, but he doesn't expect anything else in return

**Peter** is willing to loan you the money. He would like you to pay him back when you are able, but he also expects you to help him carry some boxes for his move in return.

Next, participants were asked to answer questions about how strongly they would feel the different social emotions as a function of which lender they chose.

For instance, they were asked the following question about gratitude:

In terms of **gratitude**, would you feel:

Much more grateful if **John** loaned you the money

Somewhat more grateful if **John** loaned you the money

Somewhat more grateful if **Peter** loaned you the money

Much more grateful if **Peter** loaned you the money
They were also asked, using the same phrasing and scale, about guilt and indebtedness.

Finally, participants were asked to choose between the two lenders:

Which friend will you ask for money?

## Results

All statistical tests are binomial tests. Results were tested at $\alpha$ = 1% according to the Bonferroni correction.

As predicted by the first hypothesis about the social emotions, more participants (71%) expected to feel much more or somewhat more guilty ($p < 0.001$), more participants (69%) expected to feel much more or somewhat more indebted ($p < 0.001$), and more participants (91%) expected to feel much more or somewhat more grateful ($p < 0.001$) when the lender requires no extra cost for the loan.

As predicted by the second hypothesis about borrowing, some participants (29%) chose the lender who imposes an extra cost for the loan ($p < 0.001$). We also tested the robustness of this result with more exigent benchmarks, and find that it is significant at the 5% ($p < 0.001$), 10% ($p < 0.001$), and 20% ($p < 0.01$) level.

## Discussion

In line with our predictions, participants expected to feel less guilty, grateful, and indebted when the lender incurred a lower cost, as a result of receiving a favor from the borrower. Moreover, 29% of participants preferred to take on a loan from someone who asked for a favor in return, which would allow them to reduce the negative emotions they would feel when taking on the loan. The results of a previous version of Study 3, which did not sufficiently specify the expectations of the lenders, can be found in the Supplementary Information. The results were essentially identical.

## General Discussion

In Study 1, we found that emotional responses to debt – including guilt, shame, anger, and gratitude – are responsive to changes in WTRs (or estimated WTRs) caused by changes in the benefits to the borrower or costs to the lender, as predicted by the social emotions framework. Study 2 confirmed that indebtedness could be triggered either by gratitude or by guilt, when novel information about the benefit of a loan is revealed. Study 3 suggests that
social emotions can influence borrowing choices, leading some participants to prefer to
borrow from a lender who imposes an extra cost on them.

The present studies contribute to the literature on social emotions, particularly guilt,
gratitude, and indebtedness. In our studies, guilt is well predicted by WTRs, in line with the
recalibrational theory of emotions (Sell, 2011; Tooby & Cosmides, 2008). Guilt emerges from
an overly low WTR towards someone else: participants indicated that, in a borrowing
scenario, they would feel more guilt when the costs to the lender were high, or the benefits
to themselves were low. Anticipated guilt (and attempts at reducing it) also appears to
influence willingness to take on loans: in Study 3, nearly a third of participants were willing to
impose costs on themselves in order to benefit the lender, therefore increasing their
perceived WTR towards the lender, and decreasing feelings of guilt. We also find that
gratitude increases with high benefits to the lender, as well as with high costs to the
borrower. These results align with the perspective of McCullough (2008) that gratitude is an
emotion meant to facilitate long-term positive relationships.

Indebtedness is most commonly discussed in the context of repayment, and although there
is a broad agreement that indebtedness serves to motivate the return of favors or money,
there is no consensus about its emotional constituents. In our studies, we find support for the
view that indebtedness can be triggered either by guilt or by gratitude. When considering
benefits to the borrower, indebtedness can be linked either to increased gratitude from
receiving a high benefit, or to increased guilt from receiving a low benefit (relative to the cost
incurred by the lender). The present results are thus coherent with past work suggesting that
indebtedness is a mixture of guilt and gratitude, which emerges in the context of an
obligation or intention to repay a loan. Based on our experimental results, the adaptive
function of indebtedness, by contrast with guilt or gratitude considered independently, is not
entirely clear, and further research is needed in this area.

Conclusion

Scholars have argued that economic transactions are embedded in social relationships
(Angulo et al., 2024; Lewis, 2008; Morvinski & Shani, 2022). To better understand the role of
social emotions in informal debt behavior, we used an evolutionary framework according to
which social emotions reflect variations in WTRs and in the perceived WTRs of others,
showing that (i) the social emotions of guilt, shame, anger, and gratitude, react as expected
in this framework, (ii) indebtedness could be related either to guilt or to gratitude, and (iii)
some participants declared preferring to pay an extra cost when borrowing from a friend, presumably to decrease guilt and avoid social costs.

Despite its scale and long history, informal borrowing, particularly personal loans between friends or family, has been relatively little studied. The present research on social emotions may help researchers better understand people's reactions to informal borrowing. If WTRs (real or perceived) influence emotional responses to borrowing, and emotions influence behavior, then, as our studies suggest, an individual's calculation of the WTR may directly influence their willingness to borrow, as well as their willingness to repay. When people anticipate feeling more positive emotions (such as gratitude), they may be more willing to take a loan, whereas when people anticipate feeling more negative emotions (such as guilt), they may be less willing. Social relationships with lenders, not just the monetary amount received, are valuable, and negative emotions signal a credible risk to these relationships. The existing literature suggests that informal lenders and borrowers are influenced by social emotions. For instance, having given a small amount of money to a friend, lenders have been shown to resist asking for it back (Morvinski & Shani, 2022). This makes sense if the lender puts more weight on their friend being grateful (which requires that the action be gratuitous, with no expectation of direct repayment) (McCullough et al., 2008), than on the money itself – the mirror situation from the current Study 3, in which some borrowers declare preferring to pay a cost to the borrower, presumably to avoid feeling guilty.

Evidence suggests that borrowers and lenders purposefully manipulate the information they present about need and lending ability, in order to preserve social relationships while meeting their personal needs (Wherry et al., 2019). In particular, borrowers withhold information about whether (and how much) they are able to help (i.e. they increase the perceived costs of them lending money), while borrowers can insincerely insist on the urgency of their needs (i.e. increasing the perceived benefits of borrowing money) (Wherry et al., 2019). This suggests that people sometimes attempt to manipulate perceived WTRs in a way that is coherent with the present framework, and analogous to that observed in other contexts, in which individuals sometimes overstate the cost, or the benefit, of an exchange (Sell et al., 2017).

Since social emotions should play a more limited role in formal borrowing situations, the current studies have focused on informal borrowing. However, our social emotional mechanisms might also be activated in the context of formal loans, as our psychology has not fully adapted to our current environment of impersonal financial institutions. In particular, the negative emotions associated with borrowing (guilt, shame), might also lead to debt aversion (see e.g. Caetano et al., 2019; Field, 2009). Like human lenders, financial
institutions overstate the cost to themselves of unpaid loans: banks routinely employ moral
language when communicating about debt, and appeal to a sense of social and collective
responsibility (Deville, 2015). Although many barriers to formal credit are structural
(Braverman & Guasch, 1995; Demirgüç-Kunt et al., 2022; Jack et al., 2016), negative social
emotions may also contribute by making formal borrowing less appealing than it might
otherwise be.

Our studies were limited due to their online format and use of vignettes, which restricts the
ecological validity of our findings. Another limitation was the use of only U.S. participants,
which may impact the generalizability of our results. There is significant variation in formal
borrowing rates globally (Demirgüç-Kunt et al., 2022), and informal borrowing rates even in
OECD countries (OECD, 2023), which may influence baseline attitudes towards formal and
informal borrowing. Although the literature suggests that social emotions are consistent
across many cultures, with these emotions emerging in response to perceived WTRs (e.g.,
Sznycer et al., 2016, 2018), some concern may remain about countries in which there are
culturally specific debt concepts (e.g. in Japan, see Washizu & Naito, 2015). Considering a
wider range of cultures would clarify whether differences in borrowing rates across cultures
correlate with (potential) differences in social emotional responses to borrowing.

To address these limitations and expand the present findings, future research may consider
cross-cultural similarities and differences across a range of countries; settings in which
participants are asked to actually borrow something; and vignettes in which the individuals
borrow from institutional lenders. Future studies could also investigate the strategies people
use to manipulate the perceived WTRs, and whether or when these strategies are effective.
Although we found broad agreement about emotional responses regardless of whether
participants took the perspective of a borrower or a lender, some studies about informal
borrowing note an asymmetry, with borrowers displaying self-serving bias and "blind spots"
when it comes to remembering amounts owed, and lenders more commonly reporting
defaulted loans (Dezső & Loewenstein, 2012). This area could be explored in more detail.
Finally, new studies could explore the role of third-party observers in motivating social
emotions, borrowing, and repayment choices, especially in the context of asymmetric
information (i.e. when the third parties do not have the full information regarding the costs
and benefits associated with the loan).

Acknowledgement
This research was supported by funding from the French National Research Agency (ANR) to
FrontCog (ANR-17-EURE-0017) and to PSL (ANR-10-IDEX-0001-02).
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