In a Nutshell: Dignity and Debt is an initiative whose goal is to return dignity and humanity to financial services, particularly for those in debt. The project is the result of a collaboration between Princeton University, the Social Science Research Council, VizE Lab, and a number of other partners. The project undertakes research across a dozen countries to understand and empower the connections between lending and human values. the program is currently focused on researching how debts are being collected, the student debt crisis, and the unnecessary suffering that debt can bring. These are quiet crises sometimes suffered in shame.
I think it’s safe to say that nobody enjoys being in debt. But it’s simply a fact of life for millions around the world. Of course, there are different kinds of debt. Automobile payments, mortgages, and a reasonable amount of credit card debt are pretty much accepted as a necessary cost for many.
Then, there’s the other kind of debt, where the amount owed has become unmanageable and the person is falling behind each month, collections agencies are calling, and a feeling of hopelessness sets in.
Oftentimes, the people in debt feel as if the companies are treating them as if they never intended to pay their debts, as if they are not honest, hardworking people. This can lead people in debt feeling morally diminished in an already difficult situation.
The Dignity and Debt project is focused on solving this common problem using research, analytics, and expertise to create financial solutions that will restore humanity to finance and allow people to be treated with the respect they deserve. The project is the result of a collaboration between the Social Science Research Council, Princeton University, and VizE Lab.
To learn how the program came about, we e spoke with Frederick Wherry, Founder and Principal Investigator at Dignity and Debt and Class of 1917 Professor of Sociology at Princeton University. Wherry also offers insight into how the program seeks to help people regain their dignity through research and financial solutions.
“Loans enable people to realize their visions of a good life, yet many families across the globe are falling into life-altering debt,” according to Dignity and Debt. “Worried that they will forever be enslaved by it, some parents have trouble sleeping and their health and relationships diminish.”
Launching the Project After Seeing How People in Debt are Treated with Less Respect
Wherry conceived the idea for the Dignity and Debt project when he identified common problems in several projects he was involved in. These lessons came not just from the U.S. but from Kenya, Argentina, and Brazil.
Wherry found that people in low socioeconomic brackets were being further marginalized, either by financial institutions or the financial products they were given access to.
People wanted access to credit and debt, he said, because it represented their inclusion or sameness with everyone else. Wherry said it was a way for someone to signal that they are a grown-up and live the way grown-ups live.
“The other thing that became apparent was that they were sometimes willing to pay a really steep price in order to keep their chin up,” Wherry said.
This means people who had some level of financial education and understood the stakes of the loans were taking out high-cost loans.
“They basically said, I am a parent, I have obligations to my children, I have to worry about my parents as well,” he said. “So, there was a sense of, ‘How do you live with dignity at nearly all cost?’ It became pretty apparent that people were paying a price for dignity.”
Wherry discussed another way dignity plays into the financial narrative as well.
“The other thing I started to see just by virtue of looking at complaint narratives and the Consumer Financial Protection Bureau’s database was what happens when people are behind on their payments and the things they complain about,” he said.
He said a lot of people complain about how they are treated once they fall behind on payments.
“There was an expressed concern with dignity and respect; you get the sense that ‘you don’t talk to another grown-up like that,’” Wherry said. “One woman was very embarrassed because she was cursed out in front of her daughter, and the daughter cried. Here she is in her role as a mother, and she’s being referred to as a loser.”
Despite the situation, and whatever consequences someone is facing because of debt, Wherry said that each person should be treated as a human being and as an adult.
Working to Understand and Empower the Connections between Lending and Human Values
After observing the challenges people face when it comes to maintaining dignity in the face of debt, Wherry launched the Dignity and Debt initiative. The program consists of a network of partners across a dozen countries developing data-rich analyses and innovative financial services for low and moderate income households.
“Rather than using stories and texts as anecdotes, the network combines both richly-detailed case studies and experiments and computational analysis of large bodies of texts to assess the meanings and values that affect financial capability and well-being,” according to the organization.
This approach allows the researchers to look at specific questions, including how different meanings of dignity and respect affect which debts consumers are likely to repay first, and why and how meaningful values operate in face-to-face versus virtual encounters with financial providers?
“Our first objective is to ask whether a business case can be made for using respect to improve customer experience and to reduce the cost of loan defaults?” according to the project website. “Does the inclusion of respect decrease the cost of debt collection while increasing consumer financial well-being?”
The project’s second objective is to redesign existing financial services with the goal of increasing the positive aspects of dignity and respect, while simultaneously increasing the financial returns of the new designs.
The final goal will be to generate public support for debt with dignity.
“We plan to change the conversation about credit and debt among those measuring financial access and wellness, such as those writing legislation on credit access and debt, and those providing financial services,” according to the organization.
Building a Strong Network of Partners to Carry Out Innovative Projects
To achieve its objectives, the Dignity and Debt project is supported by a strong partner network and made possible by several key organizations, including the Social Science Research Council, Princeton University, the Princeton Institute for International and Regional Studies, VizE Lab, and the Mastercard Center for Inclusive Growth.
Wherry discussed how a strong network is essential for Dignity and Debt to succeed as well as some of the projects the organization is currently working on.
“Princeton has a science fund to sort of help jump-start these initiatives,” Wherry said. “And what the initiative looks like right now is, we have one initiative on student debt, and we have another initiative that we hope to announce in the coming months on debt collections as well as other initiatives.”
The student debt initiative includes exploring issues and solutions for student loan debt traps on a number of fronts, according to Dignity and Debt. This includes the 2019 conference, “Digging out with Dignity,” at Princeton University.
Additionally, in collaboration with the VizE Lab, the initiative aims to enable scholars, students, and former students to visualize data on the enduring social inequalities that structure student debt.
“We offer means to broaden the conversation about the impact of student debt and imagine solutions for the student debt crisis and for financing higher education,” according to the organization.
Wherry said that, regarding the debt collections initiative, Dignity and Debt is seeking to gain a better understanding of how deep the debt crisis goes.
“Debt collection is one of those quiet crises — a lot of people are experiencing debt collection. Nearly 1 out of 3 Americans have had debt turned over to collections,” he said. “But it’s not as if you see something really dramatic happening when someone is taken to court over their debt. Most of the time they don’t show up for the court date and find themselves owing in fines and fees more than the debt itself, in some cases. No one sees it, so debt collection’s kind of this invisible, quiet crisis.”
Dignity and Debt includes in-depth details about all of its current and past projects on its website.
Wherry said one of the big successes of Dignity and Debt’s network is simply having so many different people working together to produce meaningful results.
“The network has been valuable for us being able to pull together clusters of people who aren’t usually together, and then do it in a way so that translation can happen,” he said. “Then there can be important follow-up things that can happen that we don’t have to coordinate.”