Deciding between Domains: How Borrowers Weigh Market and Interpersonal Options

Abstract

Individuals routinely satisfy borrowing needs by transacting in the market or by relying on social relations. In the market domain, price logic leads borrowers to choose the cheaper option; in the interpersonal domain, role-matching logic leads borrowers to choose the relation best matched to the act. But how do individuals choose when faced with options from each domain? Drawing on theories in economic sociology that assert the economic and the social are mutually constitutive, we posit that when market and interpersonal options appear in the same choice set, the characteristics of one option inflect how people assess the other. Through two survey experiments, we show that price sensitivity toward the market option is less when the interpersonal option is role mismatched and that concerns about interpersonal borrowing changing or damaging the relationship attenuate when the market option is expensive. We discuss the implications for studies of stratification and financial decision-making.

Keywords

borrowing credit decision-making economic sociology

In everyday life, people often face the decision about whether to satisfy an economic need by transacting in the market or by relying on social relations. Parents hire a babysitter or call up the grandparents. Teenagers open a rideshare app or ask a friend for a lift. Couples order out for dinner or propose that someone cooks. Choice sets thus often include options from different domains of life (i.e., the market and the interpersonal), which is notable because cultural beliefs about associated costs and benefits and the right way to make “good” decisions vary by institutional order (Boltanski and Thévenot 2006; Friedland and Alford 1991; Thornton, Ocasio, and Lounsbury 2012). How then, do individuals evaluate choice sets that contain options from more than one domain, and how does the presence of one type of option influence the evaluation of the other?

In this article, we examine these questions, taking as our case the act of borrowing money. People have long turned to family, friends, and other relations to borrow money in an emergency. Relying on those you know to provide liquidity in a pinch is a key survival strategy, particularly for low-income and minority populations, who have historically been excluded from consumer credit (Edin and Lein 1997; Oliver and Shapiro 2005; Stack 1975). Yet households today increasingly have the option to satisfy borrowing needs via the market: consider that in 1970, only 16 percent of U.S. families had a general-use credit card, whereas today, some 80 percent do (Foster, Greene, and Stavins 2018; see Fligstein and Goldstein 2015). Despite this “democratization of credit” (Kiviat 2019; Manning 2000), borrowing from social relations remains common, and many households, even more affluent ones, continue to report using both market and interpersonal options (Campbell and Pugilese 2022; Morduch and Schneider 2017; Schoeni 1997).

Social scientific analyses typically focus on the dynamics of borrowing in just one context or the other, reflecting, perhaps, broader cultural understandings of the “market” and the “interpersonal” as distinct domains of social life with disparate logics for delineating good options from bad. In the domain of the market—where calculating individuals and firms engage in at-will transactions with arms-length others—financial costs are typically most salient. All else equal, price sensitivity serves as the guiding logic for making a “good” decision, and the attractiveness of an option declines as its price increases (Samuelson 1947). In the interpersonal domain, where relationships between actors are continuously negotiated through interaction, attending to the potential social costs of borrowing is paramount (Morduch and Schneider 2017; Stack 1975). Here, individuals weigh whether the act of borrowing is appropriate given the nature of the relationship at hand: relying financially on a parent, for example, is consistent with the expectations of that role, whereas borrowing from one’s boss or coworker is less so. In the interpersonal context, role matching serves as guiding logic for making what is culturally understood to be a good decision.

Price sensitivity and role matching thus provide frameworks for understanding how people, to a first approximation, assess choice sets when they are composed solely of market options or interpersonal options, respectively. But how do people decide when the choice set features options from both domains? Extant accounts of decision-making generally assume a trade-off mentality, wherein people weigh the costs and benefits of each option according to a priori preferences to arrive at a decision (Becker 1976; Bruch and Feinberg 2017; Fischoff and Broomell 2020). What a person ultimately chooses then serves as their “revealed preference” for what matters most to them in a given situation (e.g., price or relational integrity). In this framework, the attributes of each choice option are assumed to be stable. What this approach overlooks, we argue, is that the social and economic aspects of life are mutually constitutive (Block and Evans 2005; Emirbayer 1997; Krippner and Alvarez 2007; Zelizer 2012). That is to say, the meaning of an economic act can be reshaped by the relational context just as the meaning of relationships can be reshaped by economic acts. We argue the same dynamics are at play when actors face a choice involving both market and interpersonal options. When weighing options from different domains of social life, how people assess and weigh the benefits, costs, and potential risks of each option is not done in isolation. Instead, we contend, the evaluation of either option is contingent on the characteristics of the other. Rather than applying preformed preferences to the stable attributes of each option, the meaning borrowers assign—how they construe the attributes relevant to the decision—will vary with the total composition of the choice set.

When it comes to borrowing specifically, we hypothesize that when an interpersonal option is more role-mismatched to the act of borrowing, individuals will be less price-sensitive toward the market option. A mismatch may occur, for instance, when the interpersonal option is to borrow from one’s boss. In such a case, people would be willing to pay more for the market option than if the interpersonal option had been one’s mother or sibling. Conversely, we posit that the price of a market option will shape how people assess the potential social costs of choosing an interpersonal alternative. So when the market option is relatively expensive, we hypothesize that people will become less concerned that going with the interpersonal option would change or damage the relationship. In sum, we argue that the financial cost of the market option impacts how people construct the social costs of the interpersonal option and that the quality of role-match in the interpersonal option impacts how people assess the price of the market option.

We test these hypotheses through two vignette experiments that examine a scenario where an individual needs money to repair a broken car. In each study, we ask respondents whether an individual would choose to borrow interpersonally from a specific social relation (e.g., mother, friend, coworker) or via the market using a credit card. Consistent with domain-specific logics, we find that a preference for the credit card declines at higher interest rates and that a preference for interpersonal borrowing varies across relations with different social roles. Yet we also find that when the interpersonal option is more role-mismatched, price-sensitivity to the market option is less; that is, people are willing to incur greater financial costs in the market to avoid the potential social costs of borrowing from someone not well-matched to the act. At the same time, how borrowers assess the potential social costs of borrowing varies depending on the price of the market option: when the interest rate on the credit card is high, borrowers are less concerned that choosing the interpersonal option will change or damage the relationship.

Our findings demonstrate that when choice sets involve both market and interpersonal options, financial costs and social costs are mutually constituted—construed and assessed in relation to one another. The same credit card interest rate may be deemed too expensive when one can borrow from a parent but viewed as a bargain when the alternative is a coworker. And the thought of turning to a friend for financial help may seem offensive when the credit card option is cheap but a viable option when the market alternatives are expensive. We argue this insight can help us better understand individual decision-making processes, as well as group-level differences in financial behavior and outcomes (Campbell and Pugilese 2022; Lanuza 2020), given that disadvantaged individuals often disproportionately encounter high-priced credit.

More generally, our approach provides a theoretical framework for understanding decision-making when choice sets involve options from different domains of social life, as they often do. When faced with disparate cultural frameworks for distinguishing good options from bad ones, how people evaluate and understand each option is inflected by the configuration of the other. We thereby aim to integrate insights from economic sociology into the fast-evolving, multidisciplinary scholarship on judgment and decision-making, answering Bruch and Feinberg’s (2017:209) call for sociologists to dialogue with other disciplines by pinpointing how social “aspects of choice problems influence decision strategies” (see also, Lamont et al. 2017; Vaisey and Valentino 2018).

Background

In their year-long study of the financial activity of more than 200 American households, Morduch and Schneider (2017) reported that 40 percent of respondents borrowed from friends or family and that people borrowed this way even when they had access to market options, such as a credit card. In a national sample of low- and middle-income mothers, Campbell and Pugilese (2022) find interpersonal borrowing remains a common occurrence even among households that report having a credit card. Although the motivation for borrowing may at times look different among the poor and the rich, people of all socioeconomic stripes turn to social relations for money even when they have alternative options in the market (McGarry and Schoeni 1995; Schoeni 1997).

What makes deciding between interpersonal and market options sociologically interesting is that different domains of life come with different cultural configurations¹ (Bourdieu and Wacquant, 1992; DiMaggio 1997; Gross 2009; Swidler 1986). What one values, takes for granted, thinks possible, and considers to be sensible varies according to whether one is operating in the context of family, religion, civil society, the market, and so forth (Boltanski and Thévenot 2006; Friedland and Alford 1991; Thornton et al. 2012). It is important to be loyal among family, rule-abiding within bureaucracy, competitive in the marketplace, faithful at church, and so on. A key point of variation across domains, then, are the standards for acting “rationally” and making “good” decisions. This is not to say that these domains are ontologically discrete (Granovetter 1985; Zelzier 1994, 2000, 2012), simply that people often perceive them to be. Given that, how do people think about and make decisions that necessarily involve picking between domains?

Borrowing is a useful case for investigating how people decide between options from disparate domains because it is an act that occurs frequently in both interpersonal and market contexts with distinct and well-known modes of reasoning in each domain. In the sections that follow, we highlight the dominant norms and expectations that shape acts of borrowing in each domain, with a focus on price sensitivity in the market context and role matching in the interpersonal context. We then theorize how people approach deciding not within each system but, rather, between them. Drawing on a key insight from economic sociology that the social and the economic are mutually constitutive, we argue that the characteristics of the market option will impact how people evaluate and assess the cost of the interpersonal option and vice versa, with consequences for the decision itself.

Role Matching in Interpersonal Borrowing

Economically relying on social connections—one’s family, friends, neighbors, and so on—is a practice as old as humanity itself. As scholars have long documented, in the back-and-forth process of social exchange, sometimes one takes and sometimes one gives, but importantly, the process is ongoing and reciprocal (Gouldner 1960; Homans 1958; Uehara 1990). Particular economic transactions may end, but interpersonal relationships carry on. An important implication of this is that over time, actors come to know one another and interact along multiple dimensions, including noneconomic ones. Emotion, status, and other affective and symbolic considerations sit in the background of any transaction (Bandelj 2012, 2020; Wherry, Seefeldt, and Alvarez 2019; Zelizer 1994).

Matching economic transactions with the appropriate social relation is paramount in systems of interpersonal exchange (Bandelj 2020, Mears 2015). Zelizer (1994, 2012) offers the clearest formulation of this idea when she explores the lengths people go to in making sure that economic transactions do not undermine the meaning they assign to particular relationships. “Not any economic transaction is compatible with any intimate relation,”Zelizer (2012:152) writes. “On the contrary, people work hard to find economic arrangements that both confirm their sense of what the relationship is about and sustain it.” Washing a spouse’s clothes reifies the relationship at hand; doing the same for a coworker would confuse it. Following Zelizer’s (2012:151) precedent of using categorical distinctions that fit with labels like “friend,”“lover,” or “parent,” specific relational roles prime different negotiated meanings as to what is expected from each party in the relationship (see also Hayes and O’Brien 2021; Sussman and O’Brien 2016; Wherry 2016).

The literature on informal financial assistance is packed with examples of people asking some types of relations for loans but not others (Halpern-Meekin et al. 2015; Tach and Greene 2014; Wherry et al. 2019). This is determined, in part, by the roles people play in each other’s lives. For example, Wellman and Wortley (1989, 1990) find that parents are more likely to lend money to their children than siblings are to one another, whereas loans among friends and neighbors are rarer still. To a first approximation, borrowing money from a parent is consistent with the expectations of that role, whereas borrowing from a coworker is not.

In their qualitative study of informal financial assistance, Wherry et al. (2019) provide multiple examples of how the relationship between a potential lender and borrower inflects the meaning of a potential loan and by extension shapes the nature of the “relational work” needed to accomplish that loan (or not). In one instance, a father receives a lump sum windfall and quickly gives it away to various extended family members who were in need. His daughter, “Jessica,” however, felt slighted in that she, too, had financial obligations that her father apparently overlooked, giving her nothing. The relational role of parent-child, here, was thus transgressed, and Jessica indicates to her interviewers that she will likely “retaliate” by withholding financial support from her father in the future if he were in need.

As Zelizer (2012) shows, the economic acts we engage in with others hold the power to reconfigure relationships. Taking financial help from a friend or colleague may be somewhat out of the ordinary, but should two people go down that path, they are no longer run-of-the-mill friends or colleagues. Engaging in borrowing and lending draws people closer, often locks them into cycles of reciprocal help, and raises the specter of relational damage should, for instance, a borrower not repay as expected (Halpern-Meekin et al. 2015; Uehara 1990). Acts of borrowing can also redefine relationships in terms of hierarchy and inequality. Indeed, a desire to avoid interpersonal dependency is one reason many steer clear of social relations for loans (Greene 2017; Sharma, Tully, and Cryder 2019; Tach and Greene 2014).

When assessing options for interpersonal borrowing, people are therefore sensitive to the potential that borrowing may change the relationship and possibly damage it. This potential is less likely when the interpersonal option is role-matched for borrowing (e.g., one’s parent) and more likely when the interpersonal option is role-mismatched (e.g., one’s boss or coworker).

Price Sensitivity in Market Borrowing

Within the sphere of the market, people’s actions and justifications for actions like borrowing are greatly guided by monetary calculation. The dominant cultural understanding for what amounts to a good decision is getting the best price—low for the buyer, high for the seller—although other calculations over quantities, credit terms, and so on also come into play (Geertz 1978; Polanyi 1977). When transacting in the market, people assume that both they and the others they engage with rightly pursue a narrow version of cost-minimizing self-interest (Ailon 2020; Dobbin 1994; Frank, Gilovich, and Regan 1993). People transacting in the market therefore focus their attention on the object being traded and its price and push to the background other things they may know about the entity on the other side of the trade, at least to a first approximation (see Callon 1998).

Borrowing options within the market domain share a similar set of costs and benefits. Whether one borrows from a bank, credit card, or payday lender, arms-length transactions offer a degree of anonymity or privacy, in contrast to the social exposure entailed in interpersonal transactions. That is not to say that market transactions cannot have interpersonal elements (imagine taking out a small business loan from a friendly community banker), just that considerations about them do not dominate—especially in those markets where transactions are largely disintermediated (e.g., applying for a credit card on a website and receiving it in the mail, never speaking to a person). Moreover, the terms of loans in the market are generally fixed, which can be a benefit to those who want predictability in repayment or a drawback to those seeking flexibility. And just as the costs of market borrowing are primarily financial, so are the downside risks, including fees for late payment and myriad penalties associated with loan default, including damaged credit history.

When deciding among market options, then, borrowers mainly seek to minimize financial cost given the information they have available, all else equal opting for the lowest interest rate. In other words, borrowers are price-sensitive. Consider what happens when banks start offering mortgages at even slightly lower rates: loan applications surge (Bhutta and Ringo 2017). The idea that people decide whether to borrow and which loan option to pick based on price is, in a way, too obvious to have been studied extensively. Indeed, many studies of borrower behavior instead focus on the times people deviate from this standard (e.g., Agarwal, Skiba, and Tobacman 2009; Polletta and Tufail 2014). What this all adds up to is a market logic where price sensitivity—that is, the attractiveness of an option is inversely related to its financial cost—is the dominant normative approach for assessing options and deciding between them.

Interpersonal and Market Options: Side by Side

As we have indicated, when deciding whether to borrow from family members, friends, or other social relations, people apply a logic of role matching and weigh the possibility that borrowing interpersonally may change or damage the relationship. And when deciding between market options for borrowing, people are guided by a logic of monetary calculation that is acutely attuned to price or financial cost. But how do people evaluate options and make decisions when they face a choice set that includes an interpersonal and a market option side by side?

Extant accounts for how people make such decisions tend to assume a trade-off mentality (Becker 1976; Bruch and Feinberg 2017; Fischoff and Broomell 2020). That is, when people are faced with interpersonal and market options, they rely on a priori preferences for weighing some costs and benefits as relatively more important to them than others—for example, the market option’s anonymity and financial costs, and the interpersonal option’s flexibility and social costs. What people ultimately pick serves as their “revealed preference” for what matters.

For example, DiMaggio and Louch (1998) find that people are more likely to turn to social relations for economic transactions such as buying a used car or contracting out home repairs when they are uncertain about product and performance quality. One aspect of interpersonal exchange is that trading partners know each other in many different ways, which can help establish trust, so when trust is especially important, people will choose to transact interpersonally (see also, Uzzi 1997, 1999). But here again, as in much research on decision-making processes, the attributes of the options people are picking between are assumed to be stable (Bruch and Feinberg 2017). From this perspective, costs are always costs and benefits are benefits. All of the action is in figuring out what matters most to a given person in a given situation.

This brings a certain analytical lens to decisions about borrowing from a social relation or the market. Consider, for example, how one borrower in Morduch and Schneider’s (2017:139) study of formal and informal finance described the decision to turn to a social relation for a loan:

He offered to help out. There’s no interest. Even though you get the leeway and they understand your situation, I know I owe him. He knows I owe him. The bank doesn’t know when you take a vacation or go out of town. He does know. He wouldn’t mention it, but he knows.

In this instance, borrowing from the market comes with certain benefits (e.g., anonymity) but also drawbacks (e.g., interest charges). When borrowing from a social relation, there are different pros (e.g., flexible repayment schedules) and cons (e.g., judgment about one’s spending habits and shifting power dynamics within a relationship). If we observe the borrower turning to the social relation for the loan, then we might naively conclude that the borrower simply values cost and flexibility more than privacy and independence in some abstract sense.

Yet as economic sociologists have long argued, the social and the economic mutually constitute one another (Block and Evans 2005; Krippner and Alvarez 2007; Zelizer 2012). This means that the domain of the economic (in our parlance, the “market”) is not actually separable from the domain of the social (i.e., the “interpersonal”). To say that a market option carries certain costs and benefits and that an interpersonal option carries a different set of costs and benefits fails to consider that assessments of the costs and benefits of one option are, at least in part, shaped by the configuration of the other option. This, we argue, means that how choice sets are composed will inflect how borrowers assess the options available to them. For example, if the market option comes with strict repayment terms on a short time horizon, the flexibility of the interpersonal option will become more salient to the deliberation. When the interpersonal option is someone you would rather not be involved with financially—say, a coworker or boss—the privacy and anonymity offered by the market option will become more salient.

Which attributes of each option are most relevant to the decision and to what extent therefore depends on the composition of the choice set. This suggests that sensitivity to potential costs (and benefits) are not fixed, a priori preferences but, rather, constituted in the context of available options. Of course, psychologists and economists recognize the composition of choice sets impacts decision-making; for example, the presence of an extra-large option makes the merely large option seem reasonably sized by comparison (Bettman, Luce, and Payne 1998; Thaler 1985; Tversky and Kahneman 1981; Vaisey and Valentino 2018). Yet when choice sets involve options from multiple domains that evoke competing value systems, the mechanisms at work are not simply cognitive but also cultural, informed by normative understandings of appropriate and ideal economic behavior within each domain. When choice sets contain both market and interpersonal options, how borrowers construe and weigh potential financial costs and social costs will depend on the characteristics of each option.

Therefore, we posit that when a market option and an interpersonal option appear in the same choice set, price sensitivity to the market option will vary depending on the role match of interpersonal option, and conversely, assessments about the role match will vary depending on the price of the market option. Specifically, we hypothesize that:

Hypothesis 1: When the interpersonal option is role [matched/mismatched], people will be [more/less] price sensitive toward the market option.

Hypothesis 2: When the market option is [less/more] expensive, people will be [more/less] likely to think borrowing interpersonally will damage the relationship.

In the following, we detail the vignette experiments used to examine these hypotheses.

Vignette Experiments

Overall Approach

To examine decision-making when choice sets involve both market and interpersonal options, we conducted two original vignette experiments. In both studies, respondents were told to imagine a person, named either Alice or Robert, who needs $1,000 to cover the cost of car repairs. Respondents were told Alice/Robert can borrow the money from either a credit card (the “market” option) or a social relation (the “interpersonal” option). In Study 1, we manipulated the interpersonal option by varying the social relation offering the loan. This allowed us to establish baseline differences in demand for interpersonal borrowing (vs. a credit card) across social relationships with different role expectations. For example, we expected to find that respondents think Alice/Robert will be more likely to borrow interpersonally when the option is her/his mother or sibling but will opt for the credit card when the interpersonal option is her/his boss or coworker. In Study 2, we expressly stated and manipulated the financial cost of the credit card option, from very low cost at 0 percent interest, to moderate cost at 5 percent interest, to very high cost at 30 percent interest. This enables us to test our hypotheses that (1) respondents will be less price sensitive to the credit card when the interpersonal option is role mismatched and that (2) when the market option is high cost, respondents will be less likely to think borrowing interpersonally will change or damage the relationship.

We chose borrowing money for a car repair because this is a morally innocuous request; our results may have differed had the scenario been about an expense people would be embarrassed or ashamed to share with others (e.g., gambling debt). We further specified that no matter where Alice/Robert turned for the money, she/he planned to repay the loan within one year. We did this because when borrowing happens interpersonally, loans may be (mis)understood as gifts (Lainer-Vos 2013; Wherry et al. 2019). We chose credit cards for the market option because they are ubiquitous and used more often than installment loans to finance emergencies. Credit cards also vary markedly in the potential financial cost to borrowers, as captured by the interest rate.

We asked questions in the third person (i.e., about what Alice, not “you,” would do) to examine how people construe borrowing from a given social relation (e.g., a mother or a friend), capturing the expectations of the role irrespective of the idiosyncrasies of respondents’ own relationships. At the same time, we explained to respondents that Alice/Robert is someone “like you” to capture respondents’ own views and not those they project onto dissimilar others. For related reasons, we pretested six names and chose “Alice” and “Robert” because they were rated similarly on a range of measures, including education, race/ethnicity, age, and income. We randomly assigned a female and a male name in case respondents’ views on borrowing were strongly gendered. Responses were consistent across the two name conditions, so in the results in the following, we pool them and adjust for name conditions in our models.

We recruited respondents via Amazon’s Mechanical Turk marketplace (MTurk), a platform frequently used by social scientists to recruit research participants (Shank 2016; Weinberg, Freese, and McElhattan 2014). We restricted our study to respondents with IP addresses in the United States, ages 18 or older, and collected data in October (Study 1) and December (Study 2) 2019. We set respondent compensation to the equivalent of an hourly wage of $10.20, at the time, nearly $2 more than the federal minimum wage and higher than the minimum wage in all but nine states and the District of Columbia (National Conference of State Legislatures 2019).² In the following, we describe the methods and results for each study in turn.

Study 1

Methods

In Study 1, respondents were randomly assigned to one of two name conditions (Alice or Robert) and to 1 of 10 social relation conditions: mother, father, sister, brother, friend, adult child, boss, coworker, person Alice/Robert is dating, someone Alice/Robert knows. After reading about Alice/Robert, respondents were asked: “Is Alice more likely to borrow from her credit card or her [mother, sister, friend, etc.]?” Respondents were next asked, in an open-ended question, to explain why they thought Alice was more likely to borrow from one than the other. See Table 1 for details on response items.³

Table 1.

Experimental Conditions and Key Outcomes for Study 1 and Study 2

	Item wording	Response scale
Study 1
Experimental conditions
Social relations (10)	Someone he/she knows, mother, father, brother, sister, friend, person he/she is dating, coworker, boss, adult child
Key outcomes
Borrowing decision	“Is Alice/Robert more likely to borrow from her/his credit card or from [social relation]?”	1 = social relation, 0 = credit card
	“Please use the box below to explain why you think Alice/Robert is more likely to borrow from [choice] than from [not choice]”	Open-ended response
Study 2
Experimental conditions
Social relations (5)	Parent, sibling, person he/she is dating, friend, boss
Credit card interest rates (3)	0%, 5%, 30%
Key outcomes
Borrowing decision	“Is Alice/Robert more likely to borrow from her/his credit card or from [social relation]?”	1 = social relation, 0 = credit card
	“Please use the box below to explain why you think Alice/Robert is more likely to borrow from [choice] than from [not choice]”	Open-ended response
Relationship change	“If Alice/Robert did borrow from [social relation], how likely is it that borrowing would change their relationship?”	Very unlikely to very likely (5)
	“Do you think Alice/Robert borrowing from [social relation] would make the relationship worse or better?”	Much worse to much better (5)

Responses were collected via MTurk over two days. To identify an effect (beta) size of .2 with 80 percent power at alpha level of .1 requires 48 respondents per cell; given 20 conditions (10 social relation conditions × 2 name conditions), we set out to collect 1,050 responses that yielded 1,008 completes. Median completion time was 251 seconds. Fifty-five percent of our respondents identify as male, 71 percent identify as white, and 57 percent report completing a 4-year college degree.⁴

Findings

We start by asking a basic question: Does the decision of whether to borrow interpersonally or from the market vary depending on which social relation is making the offer? Results in Figure 1 indicate the answer is an emphatic “yes.”⁵ If we first look at how respondents react to the possibility of borrowing from a generalized other—“someone” Alice/Robert knows—then respondents largely prefer the market option. In this condition, less than one-third (28 percent) of respondents think Alice/Robert will opt for the social relation. Yet as we move from a generalized other to more specific social relations, such as father, sister, and coworker, we see a divergence, with some social relations drawing respondents toward interpersonal borrowing and other social relations pushing them even further from it. When the alternative to the credit card is one’s mother, 70 percent of respondents think Alice/Robert will borrow interpersonally. At the other end of the spectrum, when the interpersonal option is one’s boss, only 10 percent of respondents think Alice/Robert will borrow from a social relation rather than from the credit card.

Figure 1.

Proportion Choosing Social Relation Over Credit Card.

Reviewing the open-ended responses where respondents were asked to explain their rationale, we see logics from both market and interpersonal domains are at play. Respondents cite the financial cost of the credit card option as well as the (potential) relational costs of the interpersonal option as central to their deliberations, often weighing one against the other. Table 2 summarizes the frequency of such considerations across conditions.

Table 2.

Percentage of Respondents Mentioning Relational Change or Financial Cost, by Relational Condition (Study 1)

Interpersonal condition	Reason cited
Interpersonal condition	Relational change	Financial cost
Adult child	5%	26%
Boss	28%	10%
Brother	10%	40%
Coworker	18%	25%
Dating	27%	22%
Father	2%	53%
Friend	28%	31%
Mother	2%	51%
Sister	9%	32%
Someone	16%	27%

Note: Categories not mutually exclusive. A small number of respondents (12) mentioned both financial cost and relational change.

In evaluating the interpersonal option, respondents do not simply construe some relationships as more economic than others. Rather, the factors people invoke to justify opting for or against interpersonal borrowing vary by the type of relationship in question. For example, respondents were more likely to talk about the possibility of the relationship changing when the social relation was not a family member. As one respondent wrote: “By borrowing from the card, he won’t be jeopardizing his friendship in any way.” Large proportions of respondents in the boss, coworker, dating, and friend conditions (between 18 percent and 28 percent) mentioned relational change. However, barely anybody in the adult child, father, and mother conditions did (all 5 percent or lower). Respondents in the sister and brother conditions fell in between (9 percent and 10 percent, respectively). This suggests that certain types of relationships are more likely than others to be reconstituted by economic action.

The open-ended responses also reveal a difference between social relations from whom respondents think it may not be a good idea to borrow and those social relations from whom respondents think it is inappropriate to borrow. Some relationships are thus more likely than others to be seen as fundamentally mismatched with the act of borrowing. As one respondent wrote: “To be in debt to a coworker for a year is not a normal occur[r]ence in our society.” Here, borrowing is not simply complicated and potentially inadvisable but instead is wholly incompatible with the set of behaviors consistent with the role of a coworker.

Finally, it is notable how frequently respondents mentioned the potential cost of the credit card option given the prompt did not say anything about interest rates or fees. Respondents in the mother and father conditions were most likely to mention financial cost (in each case, about half of respondents), but what nearly all respondents were articulating was the assumption that parents would not charge interest on the loan. An assumed lack of interest often went with respondents picking the interpersonal option. Here, even without ever specifying the cost of the market option, we begin to see that how people view and evaluate the interpersonal option is in part shaped by how they view and understand the credit card option and vice versa.

But does the role match of the interpersonal option impact sensitivity to the price of the market option? And does the price of the market option impact how respondents assess the potential relational costs of borrowing interpersonally? We turn to these questions in Study 2.

Study 2

Methods

In Study 2, respondents read a version of the scenario that reflected three experimental manipulations: the social relation, the credit card interest rate, and the interest rate charged by the social relation. For the social relation conditions, respondents were assigned to either parent, sibling, friend, boss, or person Alice/Robert is dating.⁶ For credit card interest rate, respondents were assigned to a condition where the credit card charged 0 percent, 5 percent, or 30 percent.⁷ For the social relation’s interest rate, respondents were assigned to a condition that made no mention of an interest rate or to conditions stating the social relation would charge either 0 percent or 10 percent interest on the loan. The (often uncomfortable) act of a social relation charging interest on an interpersonal loan mixes market and relational considerations in the same choice option (a situation we plan to explore in a separate article). To focus on our stated hypotheses in this article, we restrict the analysis to the subsample of respondents who saw no mention of a relational interest rate.

After reading the vignette, respondents were asked which option they believed Alice/Robert would pick. On the next two screens, respondents were asked to explain their answer in an open-ended response and to briefly describe the relationship between Alice/Robert and the social relation. After this reflection, the next two screens asked respondents whether they thought interpersonal borrowing would change the relationship and whether they thought it would make the relationship better or worse. See Table 1 for response-item wording.⁸

Participants in Study 1 were precluded from taking Study 2. To identify an effect (beta) size of .2 with 80 percent power at alpha level of .1 requires 48 respondents per cell; given (3 credit card interest conditions × 3 social relation interest conditions × 5 relation conditions) 45 conditions, we set MTurk collection for 2,250 responses that yielded 2,188 completes. Responses were collected over two days. Median completion time was 400 seconds. Restricting to respondents who saw no mention of an interest rate on the interpersonal option yielded an analytic sample of 710 respondents, of whom 59 percent identify as male, 73 percent identify as white, and 55 percent report completing a four-year college degree.⁹

Findings

Figure 2 shows the proportion of respondents choosing to borrow relationally in each of our experimental conditions. Let us first consider how the financial cost of the market option shapes borrowing decisions. Within each social relation condition, the likelihood of borrowing interpersonally is lower when the credit card option charges 0 percent interest and higher when the credit card option charges 30 percent interest. Preference for the credit card option declines as the interest rate rises—perfectly in line with first-order expectations about how price shapes financial decision-making in the market.

Figure 2.

Proportion Choosing Social Relation Over Credit Card.

Next, note that within each of the credit card interest rate conditions we continue to see that the rate of selecting the interpersonal option varies depending on the social relation under consideration. Even when Alice/Robert can borrow from the credit card at very low cost—0 percent in interest—some respondents still think Alice/Robert will choose the interpersonal option, ranging from just around 10 percent in the friend and boss conditions to upward of 30 percent in the sibling and parent conditions. At the other extreme, when the credit card is expensive at 30 percent interest, we still see variation across conditions, with nearly 9 out of every 10 respondents in the parent condition choosing to borrow interpersonally compared to only 4 out of 10 in the boss condition. Irrespective of whether the market option is low cost or high cost, preference for the interpersonal option is shaped by role matching and the logic of relational matching.

Within each social relation condition, proclivity for the interpersonal option increases as the price of the market option increases. And within each credit card interest rate condition, demand for the interpersonal option is consistently higher for social relations deemed a better match for informal borrowing. But does price sensitivity to the credit card interest rate differ depending on the social relation in the interpersonal condition? And does the sensitivity that interpersonal borrowing may change or damage the relationship differ depending on the price of the credit card option? In other words, do the characteristics of the market and interpersonal options inflect how people assess and evaluate the other?

Our first hypothesis is that when the interpersonal option is role mismatched, people will be less price sensitive toward the market option. That is, we expect that respondents will be more sensitive to the credit card interest rate when the option to borrow interpersonally is, for instance, Alice/Robert’s mother—a social role that is well matched with borrowing—compared to when the interpersonal option is viewed as a less appropriate match for borrowing, such as Alice/Robert’s boss. Comparing the rate of change across the bars within each interpersonal condition, we see that respondents are indeed more sensitive to the price of the credit card in some conditions than in others.

Looking, for example, at how decisions differ when the credit card is charging 0 percent versus 30 percent, we find the starkest difference among respondents in the parent and friend conditions. These respondents are most responsive to higher interest rates. Next come respondents in the sibling and dating conditions, where we see a smaller but still sizable increase in interpersonal borrowing when the credit card is 30 percent. And finally, respondents faced with the option of Alice (or Robert) borrowing from her boss.¹⁰ Price sensitivity to the market option differs depending on the specifics of the interpersonal option: When the social relation is role matched for borrowing, respondents are more sensitive to the interest rate on the credit card. That is, people are less willing to accept the financial costs of borrowing in the market when the alternative is to borrow interpersonally from someone well matched to the act.

Table 3 presents results from a linear probability model by ordinary least squares (OLS) that estimates the interaction between the 30 percent interest rate condition (0 percent as reference) and each of the social relation conditions. Column headings list the omitted social relation, which we rotated to obtain estimates of pairwise comparisons (parent vs. sibling, sibling vs. boss, etc.). Here we see that moving from the 0 percent to 30 percent credit card interest rate leads to a bigger shift toward interpersonal borrowing among respondents in the parent condition compared to those in the boss or dating conditions. We also find that respondents are more sensitive to the price of the market option when the interpersonal option is Alice/Robert’s friend than when it is Alice/Robert’s boss. These findings provide direct support for Hypothesis 1: price sensitivity to the market option is less when the interpersonal option is role mismatched for borrowing.

Table 3.

Linear Probability Model Predicting Decision to Borrow Interpersonally: Restricted to 0 Percent and 30 Percent Credit Card Interest Rate Conditions (Study 2)

	Reference Category
	Parent	Sibling	Dating	Friend	Boss
Credit card 30% (reference = 0%)	.581***(.0871)	.427***(.0895)	.329***(.0842)	.547***(.0892)	.284**(.0876)
Relation conditions
Parent	—	–.0144(.0879)	.0874(.0894)	.191*(.0842)	.176*(.0869)
Sibling	.0144(.0879)	—	.102(.0896)	.205*(.0843)	.190*(.0870)
Dating	–.0874(.0894)	–.102(.0896)	—	.103(.0858)	.0886(.0885)
Friend	–.191*(.0842)	–.205*(.0843)	–.103(.0858)	—	–.0148(.0832)
Boss	–.176*(.0869)	–.190*(.0870)	–.0886(.0885)	.0148(.0832)	—
Interaction terms
Parent × credit card 30%	—	.154(.125)	.252*(.121)	.0337(.124)	.297*(.123)
Sibling × credit card 30%	–.154(.125)	—	.0981(.123)	–.121(.127)	.143(.125)
Dating × credit card 30%	–.252*(.121)	–.0981(.123)	—	–.219(.122)	.0446(.121)
Friend × credit card 30%	–.0337(.124)	.121(.127)	.219(.122)	—	.263*(.125)
Boss × credit card 30%	–.297*(.123)	–.143(.125)	–.0446(.121)	–.263*(.125)	—
Observations	473
R ²	.284

Note: Standard errors in parentheses. Respondents in the 5 percent credit card interest condition excluded from the analysis. Model also adjusts for name condition (Alice/Robert) and survey duration (in hundredths of seconds).

Relational considerations shape how respondents evaluate and respond to the cost of the market option, but does the cost of the market option shape how respondents evaluate and respond to the interpersonal option?

As the literature on relational matching suggests and the first part of our findings confirms, a major disadvantage to relational borrowing is its potential to reconstitute relationships in undesirable ways. Figure 3 displays the fraction of respondents in each interpersonal condition who report if Alice/Robert were to borrow from her/his social relation it would “likely” or “very likely” change the relationship. Collapsing across credit card conditions, we see that only 20 percent of respondents think borrowing from a parent would change the relationship compared with two-thirds in the friend and dating conditions and 80 percent in the boss condition.

Figure 3.

Will Borrowing Change the Relationship?

To capture how respondents thought the relationship might be affected, we asked all respondents to rate on a 5-point scale whether they thought borrowing from the social relation would make the relationship with Alice/Robert better or worse. Results are presented in Figure 4. As expected, respondents are more likely to think borrowing interpersonally will damage the relationship with Alice/Robert’s boss or friend than her/his parent.

Figure 4.

How Will Borrowing Change Relationship?

Yet note that within each relation condition, concern that interpersonal borrowing may damage the relationship declines as the price of the market option increases. In Table 4 we estimate a linear model by OLS to examine how the credit card interest rates impacts relational considerations. For both outcomes, we see a large and statistically significant difference between the 30 percent and 0 percent credit card conditions. When the market option is high financial cost, respondents are less likely to think interpersonal borrowing will change or damage the relationship. These findings provide direct support for Hypothesis 2.

Table 4.

Effect of Credit Card Interest on Assessment of Whether Interpersonal Borrowing Will Change Relationship and How: Linear Model Estimated by Ordinary Least Squares (Study 2)

	Change relationship? 5-point likelihood scale	Change relationship how? 5-point scale worse to better
Relation condition (reference = parent)
Sibling	.506***(.130)	–.250**(.0900)
Dating	1.319***(.128)	–.458***(.0884)
Friend	1.185***(.127)	–.495***(.0879)
Boss	1.635***(.127)	–.723***(.0877)
Credit card interest (reference = 0%)
5%	–.182(.0994)	.0372(.0688)
30%	–.388***(.0996)	.186**(.0689)
Observations	710	710
R ²	.252	.118

Note: Standard errors in parentheses. Models also adjust for name condition (Alice/Robert) and survey duration (in hundredths of seconds). Results similar when estimated using multinomial logit models.

p < .05. **p < .01. ***p < .001 (two-tailed tests).

Discussion and Conclusion

Economic sociologists teach that the “economic” and “social” are not separate spheres (Granovetter 1985, 2017; Zelizer 2000, 2011, 2012), yet individuals deciding between market and interpersonal options must simultaneously grapple with two distinct systems of symbolic meaning and cultural practice (Boltanski and Thévenot 2006; Friedland and Alford 1991; Thornton et al. 2012). Each of these systems suggests how options should be evaluated and what a good decision looks like. In this article, we investigated how people faced with the competing cultural criteria of interpersonal and market life understand their options and act on them. Leveraging the case of borrowing, we found that the configuration of a market option changes how people evaluate an interpersonal option, that the configuration of an interpersonal option changes how people evaluate a market option, and that both bear on the decision itself. Price sensitivity to the market option varies depending on how well matched the interpersonal option is to the act of borrowing. And fears that interpersonal borrowing will change or damage the relationship differ depending on the financial cost of the market option.

The question of exactly why people are less concerned that interpersonal borrowing will damage the relationship when the market option is expensive is an important question for future research. It is possible that the financial cost of the market option impacts perceptions of the relational work that will be necessary to ensure the relationship is not damaged by the act of borrowing and lending. For example, when the market option is expensive, individuals may be less worried interpersonal borrowing will damage the relationship because they can use the financial cost of the alternative to justify soliciting and accepting help from a role-mismatched relation. An appeal for interpersonal help when the market alternative is cheap could be viewed differently from an appeal for interpersonal help when the market alternative is financially burdensome.

Our findings extend the relational perspective in economic sociology (Bandelj 2020; Zelizer 2012) by revealing how one aspect of broader context—the price of market financial products—can moderate interpersonal considerations and, in turn, shape economic decisions. When formal credit is expensive, informal options are more attractive, both monetarily and relationally. This points to one potential driver of differences in economic behavior across groups, given systematic variation in the price and availability of financial products. For example, Black Americans are more likely to be offered high-cost financial products (Faber 2019) and may also have higher normative expectations of being able to borrow from friends and family (Dwyer 2018; Oliver and Shapiro 2005; Stack 1975). This article points to a novel mechanism linking the two. To the extent particular social groups more readily think informal borrowing is a good idea, such differences may at least in part derive from differential (including discriminatory) access to affordable credit. Our framework and findings, therefore, have direct implications for not only economic sociology but also stratification research given that one’s choice sets are often patterned by status and (dis)advantage. Indeed, this may help us account for why greater access to credit has done little to reduce demand for interpersonal borrowing especially among the lowest-income households (Campbell and Pugilese 2022) or why minority and immigrant groups are more likely to engage in interpersonal lending than their white peers (Hill 2022; Lanuza 2020; O’Brien 2012). Our findings suggest that unattractive features of market options (e.g., a high interest rate) do not merely make the market option less attractive but simultaneously make the interpersonal option more so.

One part of our case that we have left largely unexplored is the fact that people have such different responses to borrowing from various social relations in the first place. For some social roles, sizable portions of respondents pick the interpersonal option even when the credit card interest rate is zero. Why, exactly, we see this pattern could be fertile ground for future research, especially were it to draw in insights from social exchange theory (e.g., Cook et al. 2013; Molm, Whitham, and Melamed 2012), which provides a framework for considering types of exchange–for example, reciprocal versus negotiated–that only partly overlaps with the dichotomy of interpersonal versus market that we use here. Indeed, put in conversation with relational economic sociology, social exchange theory could provide a fruitful way for unpacking the different exchange assumptions that underpin different social roles before we even get to the question of how the features of market options influence the perception of interpersonal options and vice versa.

More generally, this article highlights the complexity of choosing between options from life domains that feature disparate, seemingly incommensurable, orienting logics. This matters because people constantly make decisions about whether to satisfy economic needs via social relations or the market. Economic acts that can appear in multiple domains permeate our lives and in ways that speak to the concerns of sociologists studying a broad range of phenomena, from stratification to gender dynamics to consumption and beyond. Consider the decisions to rent an apartment or stay with family, to rely on one’s spouse to cook dinner or order in from a restaurant, to ask a brother for some freelance work at his company or start to drive a ride share, to send your children to private school or educate them at home, and so on. Our theoretical approach is particularly relevant today given that companies are increasingly creating novel market options for needs traditionally met relationally (Chan 2009; Hochschild 2003; Turco 2012; Zelizer 1979). Our theory suggests that the simple presence of market options changes how people understand and value offers of help from the people they know.

Take the example of day care. Parents of small children often face a choice: pay for professional day care or have a family member mind the child. Our framework suggests that in making this decision, a person will not simply compare the two options’ pros and cons and decide according to a priori preferences. Rather, the way a person construes her options and makes a decision will depend on how the cultural logics of the market and interpersonal domains get refracted through the particulars of each alternative. So, for instance, we might predict that a parent would evaluate day care differently depending on whether the interpersonal option is her mother or an 18-year-old cousin. If, in considering the cousin (but not the mother), the parent contemplates how often she will have to give guidance—and risk that this unsolicited advice could create tension in the relationship—then the professionalism of the day-care center (i.e., the lack of a need for guidance) will become a more salient benefit and a bigger part of the decision than it would when the alternative is the mother. The fact that “cousin” rather than “mother” appears in the choice set changes not only how the parent makes her decision but also how she understands the decision she is making.

Ultimately, our findings underscore the importance of attending to the way that choice sets are composed. The idea that the combination of choices people face affects how they make decisions is not new: include an incredibly high-priced option and suddenly the second-most expensive one does not seem as pricey (Bettman et al. 1998; Tversky and Kahneman 1981; Vaisey and Valentino 2018). What we have done here is to go further by showing that the influence of context is not simply a psychological process but a cultural one as well. The construal of costs and benefits derives from larger interpersonal understandings of what counts as relevant information and sensible decisions within particular institutional orders. It is important for researchers to consider full choice sets that include both interpersonal and market options because each alternative has the potential to shift underlying assumptions about what matters even when such options’ attributes are not readily commensurable.

Supplemental Material

sj-docx-1-spq-10.1177_01902725221108964 – Supplemental material for Deciding between Domains: How Borrowers Weigh Market and Interpersonal Options

Supplemental material, sj-docx-1-spq-10.1177_01902725221108964 for Deciding between Domains: How Borrowers Weigh Market and Interpersonal Options by Rourke O’Brien, Adam Hayes and Barbara Kiviat in Social Psychology Quarterly

Footnotes

Acknowledgements

All authors contributed equally to this article. For helpful comments and guidance, the authors thank Laura Adler, Matthew Clair, Carly Knight, David Pedulla, Kim Pernell, Viviana Zelizer, members of the University of Wisconsin’s Household Finance Research Seminar, and participants of the Society for the Advancement of Socio-Economics 2019 annual meeting. We also thank Harrison Bushnell for excellent research assistance. Study and replication materials available at DOI 10.17605/OSF.IO/VQ6JF.

1

This is similar, in a sense, to Bourdieu’s conception of fields and how people orient themselves to the governing logics of a specific field (Bourdieu and Wacquant 1992). Here, one could construe the “interpersonal” and the “market” as subfields of the economic field, each with its own taken-for-granted assumptions (nomos) and organizing principles (illusio; see also ).

2

This hourly wage assumes people completed the survey in 5 minutes. Many completed it in less time.

3

See for full vignette.

4

See Appendix A for sample characteristics (Table A1) and a test for covariate balance across conditions ().

5

See for regression model.

6

We collapsed the number of relational conditions from Study 1, after seeing which conditions elicited similar answers, to allow for more variation in other treatment conditions. We excluded the two name conditions (Alice/Robert) from power calculations given similarity across names in Study 1.

7

Our high interest rate condition (30 percent) corresponds to the upper end of what credit cards actually charge.

8

See for vignette text.

9

See Appendix B for sample characteristics (Table B1) and test for covariate balance across conditions ().

10

We observe similar—although less pronounced—patterns when comparing the 0 percent and 5 percent credit card interest rate conditions. See Appendix B, Table B3.

ORCID iDs

Rourke O’Brien

Adam Hayes

Barbara Kiviat

Supplemental Material

Supplemental material for this article is available online: .

Bios

Rourke O’Brien is an assistant professor of sociology and a faculty fellow in the Institution for Social and Policy Studies at Yale University. He is a social demographer and economic sociologist with research interests in household finance, public finance, and population health. His research has appeared in journals including the American Journal of Sociology, Demography, Socio-Economic Review, and The Review of Economics and Statistics.

Adam Hayes is an assistant professor of sociology at the Hebrew University of Jerusalem in Israel. Adam’s work examines how social forces influence individual economic behavior and decision-making, falling at the intersection of economic sociology and behavioral economics. His research has appeared in journals including Social Forces, Socio-Economic Review, Finance and Society, and Sociological Theory.

Barbara Kiviat is an assistant professor of sociology at Stanford University. She is an economic sociologist who studies how moral beliefs and other cultural understandings shape markets and justify the inequalities they produce. Her research has appeared in journals including the American Sociological Review, Socio-Economic Review, Sociological Science, and Socius.

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