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Key Takeaways
- The word for debt in many Germanic languages also implies guilt, potentially influencing attitudes toward borrowing and debt.
- New research provides causal evidence that the moral connotations embedded in debt-related language significantly reduce willingness to borrow for individuals and firms.
- This linguistic effect impacts household and public debt attitudes, business financing plans, and how politicians frame fiscal policy.
- Experimental data shows that using guilt-laden terms for debt discourages borrowing even when it is financially optimal.
- Politicians opposing public borrowing strategically use guilt-associated debt language more often than those advocating for it.
The Lingering Shadow of Guilt in Debt Terminology
In numerous Germanic languages, the common word for debt also carries a meaning synonymous with guilt. This linguistic overlap has long been suspected to foster a deeper aversion to debt within these cultures. This sentiment was notably invoked by former French finance minister Bruno Le Maire to characterize Germany’s fiscal conservatism, observing that In Germany, debt is ‘die Schuld’. It’s both the financial debt and the fault. There’s a kind of guilt in debt.” Similarly, The Economist (2015) pointed out that “this mental link helps explain Germany’s peculiar concern with borrowing money”.
The influence of language on human perception and decision-making, particularly in economic contexts, has been a subject of philosophical and linguistic debate (Sapir 1929, Whorf 1956). However, debt aversion is demonstrably shaped by a confluence of factors, including economic conditions, institutional frameworks, and broader cultural norms (Almenberg et al. 2021, Martínez-Marquina and Shi 2024). The precise role of language itself, whether it actively shapes economic thinking or merely reflects underlying cultural values, has remained an open area of inquiry.
New Research Reveals Causal Link Between Language and Debt Attitudes
A recent study (Aksoy et al. 2025) presents the first causal evidence demonstrating that language directly influences economic attitudes and behaviors concerning debt. Leveraging extensive cross-country surveys, incentivized experiments, and detailed text analysis, the research underscores the potent impact of moral connotations embedded within debt-related vocabulary. These findings indicate that such language reduces individuals’ propensity to borrow, diminishes support for government debt, affects companies’ stated financing strategies and marketing approaches, and shapes how politicians articulate fiscal policies.
Experimental Design: Isolating the Impact of Language
To establish a causal link between language and attitudes/behaviors, it is essential to expose individuals to different linguistic treatments randomly—a feat not achievable through observational data alone. Consequently, the researchers conducted four large-scale survey experiments: three within household surveys and one in a firm survey, spanning seven countries. Four of these countries (Germany, the Netherlands, Sweden, and German-speaking Switzerland) were selected because their terms for debt inherently carry connotations of guilt; for instance, the German word Schulden shares its etymological root with Schuld (meaning guilt). In these locations, participants were randomly presented with nearly identical questions about debt, differing only in the terminology used—one employing the standard, morally charged term, and the other a neutral synonym. This design effectively isolates the causal effect of moral connotations within a shared cultural and institutional environment. The remaining three English-speaking countries (Australia, the UK, and the US) served as placebo controls, where linguistic variations were not expected to yield effects due to the absence of such moral associations in the term debt.
The study also aimed to determine if linguistic framing influences actual financial behavior beyond mere attitudes. A borrowing-to-invest experiment conducted in Switzerland involved participants who could borrow up to CHF100 at a 5% interest rate. They could then invest this borrowed amount in an opportunity offering a guaranteed 10% return. Therefore, borrowing the maximum available amount represented the profit-maximizing strategy. The description of this borrowing opportunity was randomized, with the sole variation being the terminology used for debt. This approach allowed any differences in behavior between the treatment and control groups to be attributed to the causal impact of the language itself.
The Power of a Single Word on Debt Perception
The experimental results reveal a significant impact: the use of guilt-laden terminology for debt led to a marked decrease in the willingness to incur debt among both households and business managers. It also lowered support for public borrowing and reduced actual borrowing in incentivized scenarios. The main findings from the survey experiments are summarized in Figure 1.
Household Debt Decisions
The research found that the simple use of a guilt-associated term for debt reduced the willingness to borrow for consumption (e.g., for items like a mobile phone or a car) by approximately seven percentage points—an 18% decrease compared to the control group that received neutral wording. Conversely, no such effect was observed in the English-speaking countries, where debt lacks inherent moral undertones.
In a distinct German survey, the scope of inquiry was broadened to include general willingness to borrow, as well as specific willingness to borrow for consumption and for real estate. The guilt-framing resulted in a 12 percentage point reduction in overall willingness to borrow (a 20% decrease relative to the control mean). The impact was significant for consumer borrowing but not for mortgages. This suggests that moral framing is particularly potent in areas perceived as less prudent, such as consumer debt, whereas mortgages are often viewed as a more socially acceptable form of borrowing.
Similar patterns were noted in the incentivized borrowing-to-invest experiment in Switzerland, where participants made tangible financial decisions. Each participant had the opportunity to take on debt to invest, with a guaranteed, risk-free return that surpassed the borrowing cost. Despite borrowing being the financially optimal choice, participants exposed to guilt-laden language were nine percentage points less likely to borrow and borrowed 23% less on average. In essence, the language implying guilt deterred individuals from undertaking an action that would have financially benefited them; the words alone led people to forgo potential earnings.
Shaping Attitudes Towards Public Debt
Regarding public debt, the study found that support for government borrowing decreased by approximately five percentage points (an 11% relative reduction) when survey questions employed guilt-connoted terminology for public debt. Importantly, this negative framing effect dissipated when the specific purpose of the debt was clearly stated (e.g., for financing social transfers or infrastructure investments).
This observation suggests that while moral language can sway general sentiments against public debt, providing a concrete context can effectively mitigate this semantic bias. In Switzerland, where citizens frequently participate in fiscal referendums, a comparable pattern emerged: support for reforms that increased public debt without specifying its purpose was notably lower when these reforms were described using guilt-associated terms.
Impact on Business Debt Strategies
The survey design was extended to include firms. In the ifo Business Survey targeting German managers, exposure to guilt-connoted debt terms decreased the likelihood of managers planning to expand debt financing and conversely increased the likelihood that they viewed rapid repayment as a high priority.
The Strategic Deployment of Language in Fiscal Debates
The research also investigated whether politicians strategically employ morally charged language when discussing public debt in the German Parliament. To this end, a dataset encompassing over 30 years of Bundestag speeches was compiled. Speeches referencing public debt were identified, and the speaker’s stance on borrowing was determined through a combination of manual annotations and automated text classification. A guilt slant measure was then constructed, defined as the frequency of guilt-connoted debt terms per 10,000 words.
Figure 2 illustrates the average intensity of guilt-related language in speeches opposing and supporting public debt (lines on the left axis), alongside the proportion of speeches in favor of public debt (bars on the right axis).
Politicians arguing against public borrowing, advocating for fiscal consolidation or stricter budget rules, utilize guilt-laden terms like Schulden significantly more often than those promoting expansionary fiscal policies.
This disparity becomes particularly pronounced in the latter half of the observed period. During this time, speeches defending higher borrowing levels became more frequent, coinciding with historically low interest rates and a declining debt-to-GDP ratio in Germany until 2019, following the introduction of the constitutional debt brake in 2016. Even after accounting for persistent individual political characteristics, such as ideology, shifts in a politician’s stance are systematically correlated with changes in their use of guilt-laden language.
Broader Implications of Linguistic Framing
The findings of this study carry several significant practical implications. Firstly, they suggest that disparities in national debt levels may, to some extent, be attributable to linguistic framing, introducing a novel dimension to the understanding of fiscal and financial behavior determinants. Secondly, the research highlights the potential for carefully selected language to influence borrowing decisions in contexts where debt aversion might be beneficial (by curbing over-indebtedness) or detrimental (by restricting productive investment). Recognizing and potentially leveraging these linguistic effects could inform communication strategies for policymakers, regulators, and financial institutions aiming to guide borrowing towards socially optimal levels.
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