photoAmerican consumers increased their borrowing for a sixth straight month in March, according to the Federal Reserve. The Fed notes borrowing increased for car loans, as well as credit card purchases.

This, of course, was almost universally greeted as good news. But not too long ago, it might not have. Taking on significant debt has become "normal"—and even patriotic—to some consumers, according to a new study in the Journal of Consumer Research.

"How did America, a country once so indelibly marked with Puritan principles of self-discipline and thrift, become a nation so awash in personal debt?" ask authors Lisa Peñaloza and Michelle Barnhart.


The researchers interviewed 27 white, middle-class Americans before the 2008 financial crisis and found that even though consumers believe that they should limit their debt, they take on debt because doing so has become normal.

"As one participant put it, taking on debt is 'the American way,'" the authors write.

For many participants, the disconnect between what consumers say they should do and what they actually do begins in young adulthood.

"When their parents did talk about credit and debt, it was to counsel them to use credit only in emergencies," the authors write. "In contrast, these study participants viewed debt as acceptable and necessary for middle class Americans who 'have to' buy a house, furnishings, a college education, and a car—items most cannot afford without credit."

Participants recognized the value of a good credit history and understood that they needed to use credit to build one.

Punished for living within her means

"The only one who had avoided credit in an attempt to live within her means found it impossible to be a 'normal consumer' without it, recalling that she had been denied a cell phone and had difficulty when traveling because she did not have a credit card," the authors write.

Although consumers generally tried to use credit responsibly, some participants "gamed" credit by taking out multiple cards, rolling over balances, and amassing large debts.

"So long as these consumers consistently paid at least the minimum amount required, financial agents rewarded them with higher credit limits and even mortgages," the authors write.

In recent decades, economic growth has been based in large part on credit. If consumers can spend more than they earn, they are able to increase consumption, thereby creating more wealth. That's the theory, at least.

In the fall of 2008, when the collapse of Lehman Brothers triggered a credit crisis, consumers found it much harder to get credit. Not surprisingly, the economy began to contract into the Great Recession.

"Spurred on by tax rebates, prominent among which is the mortgage tax deduction, ambition to get ahead, and social pressure to build wealth, study participants accumulated debt to demonstrate financial independence and express freedom, and some participants even cast their credit use as a patriotic duty to boost the national economy," the authors conclude.