Consumer debt rose to $12.7 trillion in the first quarter of 2017. That is more debt than at the height of the credit bubble in 2008. A study by researchers at Dartmouth College and the University of Southern California shows that while the amount of debt is increasing, what consumers are spending the money on is very different. More people are buying experiences rather than stuff. Eesha Sharma, a professor of business administration at Dartmouth, and Stephanie Tully, a professor of marketing at USC, are the authors of the study, “Drivers of Discretionary Debt Decisions: Explaining Willingness to Borrow for Experiential and Material Purchases,” which was recently published in the Journal of Consumer Research. They recently appeared on Knowledge@Wharton’s SiriusXM show to discuss what’s causing this shift in what consumers’ value. (Listen to the podcast using the player above.)
An edited transcript of the conversation follows.
Knowledge@Wharton: Let’s start with the research. Take us deeper into what you were trying to examine?
Eesha Sharma: Consumer debt levels have been increasing, and Stephanie and I were really interested in understanding what is contributing to why people are taking on more and more debt. We had known some about different characteristics of individuals, like their age and their income, that might contribute