To Lend or Not to Lend to Friends and Kin: Awkwardness, Obfuscation, and Negative Reciprocity

Abstract

Although family and friends can drain a household’s finances by requesting personal loans, lenders have proven savvy in how they respond to such requests. Beyond identifying the importance of sincerity tests for curtailing the pressure to help others in one’s social circle, the studies of negative social capital do not address why the pressure to lend varies according to the dramaturgical performance strategies of the benefactors. In other words, how do potential lenders manage to say no without saying no? Using interview evidence from clients at the Mission Asset Fund in California, we show how individuals engage in obfuscatory relational work, performing a self that evades the taboo of greedy callousness, while sometimes telling half-truths about not being able to help in the way borrowers would like. Unlike the concept of obfuscatory relational work, however, we focus on expected transfers that do not happen and on unreciprocated gifts that are disguised as loans. The lender and recipient are engaged in face-saving obfuscation; but in the first case, the lender presents a generous self that is emotionally close to the borrower; in the second, the lender helps the recipient of the gift maintain face by avoiding an awkward ask, pretending the “loan” is expected to be repaid. This paper outlines different strategies of obfuscation among adults trying to improve their financial lives and the contingencies at play as a ruse is abandoned in favor of a direct refusal to lend.

How do people’s relationships affect their financial decisions? When asked to provide a loan for a family member or friend, why do low- and moderate-income people comply (or not)? Existing research establishes that individuals with limited means succumb to pressures from members in their network to engage in self-defeating financial behaviors such as depleting their savings, acquiring high-interest debt, and/or damaging their credit histories. Sociologists Alejandro Portes (1998) and Rourke O’Brien (2012) describe this phenomenon as negative social capital: “The pressure on an individual actor to incur costs by virtue of membership in social networks or other social structures” (O’Brien 2012, 4). They demonstrate that negative social capital leads to reactive strategies by benefactors who must quickly respond to the financial emergencies and social obligations of their network members. While theorists of negative social capital acknowledge that individuals can also behave proactively to manage it, including the cutting off of social ties to rid themselves of such pressures, they have done less to explain why some individuals can overcome these pressures by either (creatively) denying the request for help or by greatly reducing how much they help.

We argue that negative social capital operates well when an individual feels awkward about resisting a request from a close social tie, particularly when the request seems sincere (Smith 2005, 2010). Awkwardness includes distinct reactions ranging from self-consciousness to embarrassment and shame (Goffman 1956, 1963; Modigliani 1971); and the intensity of these reactions can vary by the situational contexts. Indeed, individuals making decisions about to whom to lend and when to gift also engage in relational work, marking (and sometimes transforming) the nature of those interpersonal relationships (Zelizer 2010, 2012). To avoid feeling too awkward, individuals can engage in obfuscation (Rossman 2014), performing a self that evades the taboo of greedy callousness toward the truly distressed, while telling lies about not being able to help in the way borrowers would like. Unlike the concept of obfuscatory relational work developed by Rossman (2014), however, we first focus on expected transfers that do not happen. Then we turn to unreciprocated gifts that are disguised as loans. Rather than hide morally fraught transactions, individuals evade the transfer quietly or with dramaturgical craft. Importantly, lenders and borrowers withhold information about whether (and how much) they are able to help, while borrowers (sometimes) insincerely insist on the urgency of their needs. The play of obfuscation can fall apart as each side begins to bandy moralized depictions of one another that inflict injury. These tit-for-tat barbs sharpen, rending the ruse, damaging the relationship, and creating a more resolute justification not to lend, even for sincere requests. Potential lenders carry their own salient memories of asking for loans and having those requests denied, making it easier to deny those requests to other dyadic ties as payback or to a more generalized set of social ties, as they enact negative reciprocity (Cropanzano and Mitchell 2005). By contrast, potential lenders may also disguise the fact that a loan request cannot reasonably (or appropriately) be repaid because the requestor lacks the means or because community sharing norms make it inappropriate to pursue or to expect repayment.

In order to deepen our understanding of negative social capital, this paper uses the strategy of abductive analysis, the “process of producing theoretical hunches for unexpected research findings and then developing these speculative theories with a systematic analysis of variation across a study” (Timmermans and Tavory 2012, 131). After asking fifty-seven individuals about the last time they refused to provide a loan to a close relative or friend, we learned that many felt that they could not say no outright, but they explained that there were ways of saying no without saying so; likewise, there were ways of helping without giving in to the full request. When we asked these questions initially, we did not expect to encounter the Geertzian wink (Geertz 1994 [1973]): Is it “yes” (I’ll give you the loan), or is it “yes” (I’ll manage not to give you what you’ve requested)? We then re-examined our interviews and observations to develop some explanations about how and why these different strategies were deployed. The sample of interviews comes from clients at Mission Asset Fund (Quiñonez 2015), a nonprofit in California, and we interpret these interviews using insights from our observations over a three-year period of the staff and their interactions with clients. Although the nature of the data does not allow us to generalize our findings to a specific population, they do enable us to generate empirically testable theories about how negative social capital and obfuscation operate in the decision to provide personal loans to family members and friends (Small 2009).

Negative Social Capital and Its Critics

When Portes and Sensenbrenner (1993) entered the social capital debate, they were drawing on fieldwork from Miami where the Cuban enclave had advanced but other ethnic groups lagged. Part of the explanation for this advancement was the capacity to mobilize resources from co-ethnics for loans to start businesses, obtain working capital, and mobilize labor that may have otherwise remained dormant. The case of the Cuban enclave functioned as a strategic research site for understanding how social relationships could be managed to marshal economic capital. The community had sanctioning capacities to shame, embarrass, or ostracize co-ethnics who did not comply with shared norms of good behavior, proving useful for the maintenance of informal business contracts. Following Granovetter’s (1985) call to identify the ongoing social relations that shape economic behavior, they demonstrated how group values, norms of reciprocity, bounded solidarity, and enforceable trust could “discipline compliance with group expectation” (Portes and Sensenbrenner 1993, 1325). Indeed, they argued that trust became “enforceable by means that transcend[ed] the individuals involved” (1332), but they did not specifically theorize negative reciprocity as a key component of social capital or as a constraint on what claimants felt comfortable asking benefactors to do.

The same social ties that help individuals “make ends meet” (Edin and Lein 1997) or that people themselves thicken for the purpose of activation (Desmond 2012) can put pressure on benefactors in a network to deplete resources that could have been used for more productive purposes. With negative social capital, members of a group can free ride on those with more resources, insisting on receiving help (e.g., a job, a job referral, a loan, a gift, or other supports) even when they could have done more themselves to address their own problems. Likewise, anyone trying to get out of a bad economic situation might experience downward-leveling pressures to conform to the group’s dysfunctional behavior patterns—with the over-achiever ridiculed for trying to be something she is not (Portes and Sensenbrenner 1993). By contrast, individuals may also face upward-leveling pressures to meet a group’s moral expectations for generosity and warmth rather than cold, selfish calculation (Lamont 2000; Wherry 2008).

Just as Carol Stack (1975) identified a strong ethic of mutual obligation among the urban poor, Thomas Shapiro (2004) witnessed how this ethic affected middle-class Blacks who have family members in need. Those he interviewed in Los Angeles felt constant pressure to act as an informal community safety net. One woman named Donna explained how her husband Kevin functions as a lender for his extended family (sometimes of last resort, sometimes as the first call).

The bank of Kevin. I can’t think of anybody who has helped us, but he’s always helping people. . . Countless times, more times than I can remember. Just crazy amounts of money. Kevin fills in the blanks. Family members still owe me three, four thousand dollars. A thousand dollars. Five hundred. Seven-fifty. . . We’ve had good fortune come to us, just incredibly good fortune, and it really overweighs what we have lost in being good-hearted. (Shapiro 2004 quoted in O’Brien 2012, 9)

The money that Kevin lends to family (often without repayment) could have gone into asset building. While Kevin and Donna are comfortable financially, they seem to feel overwhelmed from time to time by all of the requests for help. Donna seems to think that most of Kevin’s relatives sincerely need his help and that they receive it without causing her or her husband considerable harm. It feels awkward not to act as a good-hearted person when doing so does not impose an undue burden. Perhaps asset building happens more slowly, but Kevin might feel unease, if not shame, from wanting to accumulate more than he needs when loved ones have more significant troubles. (And his wife has not insisted that he do otherwise.)

Mobilizing social ties requires dramaturgy, both for longstanding and fleeting relationships. Matthew Desmond (2012) argues that a thin relationship can be thickened as individuals are “cast” in a familial role, carrying the provisional status of a sibling (“We’re sisters.”), for example. The individuals enact their provisional status through an economy of favors, nicknames, scripts of belonging and connection, and the co-production of emotional warmth. The individual can deactivate or fully decommission their short-term relationships, but this usually happens after the recipient of help violates trust or causes some form of damage for which she takes no responsibility. So long as the acquaintance (the disposable tie) acts sincerely according to the rules of family, it was hard to deny their claims to familial treatment. The ongoing accomplishment of the relationship and the lack of sediment in these relationships make it easier to dispose of these ties compared with cutting off relatives and friends with whom one has had a long-term relationship.

Managing negative social capital is not a clear-cut binary of being pressured by social relations to use (or deplete) one’s money versus being cut off from those relations in order to protect scarce resources. The metaphor of arm’s length versus embedded ties enabled parsimonious theory building, yet it did not capture the range of strategies that are neither dis-embedded nor fully embedded in social relationships (Bandelj 2012; Bandelj, Wherry, and Zelizer 2017; Zelizer 2005, 2012). Individuals activate requests, acquiesce to requests, and can dynamically reform (through dramaturgy) what is expected and what is done (Wherry 2012). Those who request assistance from family or friends may feel that they honor the lender by providing them with an opportunity to show how generous and caring they are (Bourdieu 1977). Imagine that a grown child experiences severe financial distress but does not ask a sibling or a parent for assistance; she may be signaling that she does not trust that those individuals care enough about her to help. If her financial troubles become known to others, they could ask her closest relatives why they would let a loved one fall so far. And those family members who could have helped may wonder whether they had done something to discourage a request for help, asking such awkward questions as “Why wouldn’t you want to ask me? Did I do something wrong that had already damaged our relationship?”

It feels much more awkward to deny a sincere request from an honorable requestor than it does to deny one from an insincere one. Lenders draw moral boundaries around the deserving and undeserving debtor. (Sandra Smith identifies a similar dynamic among African-Americans who give job referrals to family and friends.) The criteria for discernment is likely to include the following: “if [loan]seekers had reputations or statuses indicative of a past of hard work [or consumption sacrifices]; if they appeared to be engaged in some type of productive activity, such as working, looking for work as if job search were a full-time job [or looking for financial assistance from other credible places], or, importantly, taking other necessary steps to get one’s life back on track; and/or if they ‘pressured’ jobholders [or potential lenders] for help” (Smith 2010, 38). While Smith explains the importance of sincerity tests for the receivers of help, she does not address the flip-side: how those who give (or are in a position to give) also perform tests of sincerity, offering justifications for why they cannot lend to a particular person or at a specific dollar amount.

Obfuscation and Loan Denials

Denying a loan request from someone you sincerely care about requires careful relational work, as individuals use economic activities to differentiate their social ties (Zelizer 2012). When making a decision about whether to grant a loan, the individual may not be fully aware of the relational consequences or the patterned negotiations such relationships require. Their relational work may be “an intentional effort or activity directed toward the production or accomplishment of a goal, even if that goal is not clearly defined from the start … [or] done relatively unconsciously or habitually; [or] if goals are multiple” (Bandelj 2012, 179).

Personal loans represent a twofold truth as manifestations of an economic exchange and a set of meaningful relationship histories. Lenders and borrowers enact a “collective self-deception” (Bourdieu 2000, 192) that (1) ignores the economic consequences of the loan decision for the lender, allowing her to enact a confident self-image of a responsible user of money who, therefore, cannot have severe economic consequences from helping others, or (2) uses the nature and quality of the relationship between lender–borrower to justify helping a loved one in need, even when this help comes in the form of teaching the would-be borrower a lesson—providing help that is not helpful. For many lenders, the decision to deny a close relation a personal loan cannot be framed as “nothing-but” an economic calculation (Zelizer 2005). This nothing-but stance runs counter to the lender’s portrayal of herself as a morally grounded, caring individual. Therefore, the lender may bundle the loan decision with other economic decisions in order to downplay or disguise the taboo denial of help, or the lender may use a third-party as an excuse for not providing assistance, thereby justifying what might otherwise look like a cold, mathematical calculation (Rossman 2014).

Actors practicing obfuscation require plausible deniability. The greater the introjection of moral prohibitions against an action, the higher the likelihood that the individual engages in obfuscation (Bourdieu 2000; Rossman 2014). In other words, the more socially legitimate a loan request, the greater the moral obligation to comply with it (Polletta and Tufail 2014). If a lender cloaks a no as a yes, she will have to pay attention to the environmental cues that make the denial difficult to discern, “just as a scarf over the face would make an effective disguise in the snow but would look suspicious in summer” (Rossman 2014, 57). Categorically denying a request may constitute a disreputable denial because it characterizes the lender as selfish, frivolous, or coldly calculating (not because the exchange itself is taboo) (Wherry 2008). The lender may not regard these characteristics as desirable for herself or as morally appropriate when socially significant others stand in need.

To refer to this strategy as obfuscation acknowledges the need for an illusion of effort and care, not only between the lender and borrower but also by creating a collective consensus (with imagined audiences) that these financial decisions are driven by circumstances outside of the lender or the borrower’s control. Such transactions become “viable and acceptable by facilitating self-deception, a lie told to oneself, as the condition of the coexistence of recognition and misrecognition of the logic of the exchange” (Bourdieu 2000, 192). These deceptions help the lender to do face-work with the potential borrower, avoiding a situation in which she too explicitly interrogates how needy or reliable the borrower is. This becomes especially important where either party (especially the borrower) already has a discredited or a discreditable identity (Goffman 1963). Rather than do more harm to the borrower’s identity (or to either’s moral regard), the two co-operate in defining the situation, using the “moral wiggle room” that strategic ignorance affords (Grossman 2014) as each grants the other a shared opportunity for an honorable performance (Alexander 2004).

Sandra Smith (2005, 2010) found that Black workers provided partial, obfuscated support for friends and family seeking employment; this paper argues that the same can be said for loans. In the employment example, a person who fails a sincerity test may more easily be denied assistance, but the denial is passive and cloaked by ignorance or forgetfulness. The job seeker may sense that she should not ask for too much information about the job and may wait for the grantor of the information to offer a personal referral. The job seeker might preemptively say, “Don’t worry, I won’t use your name,” in order to keep the benefactor from being put in the awkward position of saying so directly. Alternatively, both can pretend to have not thought about the usefulness of a personal referral or to have forgotten to request it. In other words, both the benefactor and the grantee proactively obscure their intentions and their needs as they diminish the awkwardness of asking or of “forgetting” to ask.

In the scenario of a direct request for a loan, there is a sincerity check. If the borrower is perceived as not sincere, a properly handled rejection need not be awkward. But too blunt a response, even in the face of an insincere request, can make the rejection somewhat awkward. If the potential borrower passes the sincerity test, however, the potential lender feels highly awkward about denying a request. Likewise, it is highly awkward to lend to someone who is lying about the reason for borrowing or who is, otherwise, deemed insincere.

In the obfuscation scenario, the requestor can imply meanings between the lines, and the potential lender can also imply intent. Both count on the listener and their wider audiences to infer the real intent of the requestor and of the responder. Potential lenders are often caught between their understandings of their communality or communal sharing relationship with the requestor and a sense of what is a fair or a proportionate response to different kinds of relations. Sometimes there is equality matching (tit-for-tat), but at other times a more dominant or authority relationship grants the lender the authority to recognize who needs help and how that help can be provided in a face-saving way (Pinker, Nowak, and Lee 2008, 834–835; see table 1.)

Table 1.

Binary Versus Obfuscated Response to Loan Requests

Binary response	Insincere requestor	Sincere requestor
Deny loan	Somewhat awkward, lukewarm support from family/friends (too blunt)	Highly awkward, negative criticism from family/friends
Lend	Highly awkward, ambiguous reaction from family/friends; sometimes a last chance to repair the relationship	Not awkward, positive support from family/friends
Obfuscated response	Insincere requestor	Sincere requestor
Deny loan	Somewhat awkward, lukewarm support from family/friends (too blunt)	Highly awkward, negative criticism from family/friends
Lend	Highly awkward, ambiguous reaction from family/friends; sometimes a last chance to repair the relationship	Not awkward, positive support from family/friends
Obfuscate	Not awkward, positive support from family/friends to lie and deny	Somewhat awkward, positive support from family, friends, & requestor to modify or delay the loan, or to disguise the gift as a loan

Obfuscating one’s capacity to provide a loan differs from hiding one’s willingness to help in other ways. If friends or kin need a ride to work, a place to sleep, or food assistance, they can comply easily sometimes if the potential benefactor has a car, has a guestroom or an uncrowded house, or a fully stocked pantry. By contrast, friends and kin face greater barriers to knowing what is in a benefactor’s bank account. And because a potential benefactor is likely to be helping others, it is hard to know whether a steady salary and sober spending habits mean that she has savings (or even lines of credit) to extend assistance.

Negative Reciprocity

Just as individuals accumulate chits and favors by virtue of performing good works in the past and just as those chits and favors can be traded in for other favors, individuals also accumulate debits and other obligations. These debits constitute short, mental notes, typically recording sums taken away; similarly, the obligations are maintained by narratives of sacrifice, assistance, and relational care. While social capital theory focused on the accumulation of chits whereby individuals give favors in order to receive them (quid pro quo), a theory of negative social capital needs to include the recollection of obligations. In contrast to the general view of reciprocity where individuals pursue selfish gains (Blau 1964; Simmel 1906), our depiction of negative reciprocity envisions an actor whose gain depends on the denial of a win to someone else. As Gouldner (1960, 172) noted in his discussion of negative reciprocity, unfavorable treatment begets negative paybacks, “not the return of benefits but the return of injuries.” (Portes and Sensenbrenner [1993] restrict their discussions of these injuries to enforcing informal contracts rather than to limiting how much and how transfers unfold.) Retaliation helps regulate social norms and when performed appropriately, can be framed as a moral obligation of the retaliator (Fiske and Rai 2014).

The individual who denies another person a win, a credit, a favor, or a chit does so on the basis of a dyadic or a generalized relationship. These tit-for-tat exchanges include money, material goods, favors, and social intangibles (Homans 1958) and take place within the emotionally laden sphere of meaningful relationships (Blau 1964; Douglass and Isherwood 1979; Zelizer 2005). Hence, a potential borrower can counteract a withholding of money from a lender with moral shaming and/or by cooling, modifying, terminating, or otherwise transforming the relationship (Zelizer 2005). The persons in the relationship may differ in who has disposable income, savings, or material goods, but the weaker individual can inflict negative reciprocity by withholding favors, bandying slights, telling reputation damaging stories to others in their social circle, or by assuming a disposition poised for revenge: “If I am asked for a loan even from a relative, I will let them see what it feels like to be turned away and humiliated.” And these negative transfers can be targeted to a person who has inflicted harm in the past or to the social circuit more generally.

Negative reciprocity counters negative social capital by lessening the pressure to provide support to others in one’s network. By manifesting negative reciprocity, the individual signals that she will not respond easily to social pressure and will require a great deal of effort. If a potential lender becomes known in a group as someone who rejects loan requests harshly or someone who scrutinizes requestors in a degrading way, she may set herself apart from, while being a member of, a group, and, therefore, will experience less pressure to lend. While practitioners of negative reciprocity may have more control over lending to family and friends, they may also experience the emotional toll from the reactions loved ones have to their rejections.

The Interviews

In the summer of 2015, we gathered fifty-seven in-depth interviews with low- and moderate-income individuals participating in Lending Circles at Mission Asset Fund. (We quote the research subjects using their pseudonyms.) Their occupations range from office administrative assistants, care-workers, housekeepers, contractors and construction workers, to municipal government employees, warehouse workers, and self-employed individuals (in the creative arts or in food and hospitality). We recruited these individuals through an organization that provides social loans aimed at establishing or improving their credit scores. These individuals have to juggle requests from family and friends to take out loans on their behalf from alternative financial service providers (e.g., payday lenders, salary anticipation loans, and car title lenders) or from rotating credit accounts, credit cards, or over-drafted bank accounts, and these situations represent emblematic cases where negative social capital is manifest. Sixty-two percent of the interviewees were women. They were largely Latino (53 percent), Asian (18 percent), Black (10 percent), and unspecified or other (19 percent). The interviewees varied by age: 24 percent were between the ages of 18 and 35; 48 percent were between 36 and 50; and the remaining 28 percent were over 50. Compared to administrative data on Lending Circle participants collected by the organization, they are largely Latinx (60 percent), Asian (12 percent), and African American (19 percent). And the majority, 64 percent, of Lending Circle participants were women. When only considering MAF clients who took out their first Lending Circle social loan in 2017 at the Mission District office, we find a larger percentage of Latinx participants (64.5 percent), a lower percentage of Asians (13 percent), and a higher percentage of Blacks (13 percent). In general, we wanted to interview a slightly smaller percentage of Latinx clients so that we could have a wider range of ethnic groups included in our sample.

In order to integrate the interview protocol into the operations of the organization, we asked MAF staff to recruit the interview subjects and to collaborate with us in designing the questions we would ask of their clients. Study participants received a $40 visa gift card and were recruited with a flyer and e-mails from program staff. The research team worked with MAF to follow-up with individuals who had missed their interviews to make sure that they could participate. Although about a 20 percent of the interviewees conducted the interviews in Spanish, they were initially the most reluctant to participate in the study and needed to be called (in some instances) and told about the study by program staff. The team also worked with MAF to encourage people with subprime and those with no credit score to participate in the interviews because initially those who had succeeded in building their credit scores were the most inclined to share their stories. About 22 percent of the interviewees did not have a credit score; 39 percent had a subprime score; and the other 39 percent were at or near prime. In short, we searched for variation in age and in their demonstrated financial capabilities in the formal economy.

We wanted interviewees to talk about their financial issues in a setting where they usually did so. We embedded an interviewer there (Marlene Orozco) who cooperated with MAF staff to schedule interviews and who had experiences with interviewing Spanish-speaking individuals in immigrant communities (some of whom use MAF’s services). Based on our observations of lending circles and ongoing dialogue with MAF, we crafted questions that encouraged interviewees to talk about the different financial services clients had used as well as the family members and friends they called on for help. We then reversed the question to ask about those moments when they provided help to others. We asked explicit questions about the loans that individuals gave to family and friends as well as loan requests that they denied.

• Tell me about the last time you had a conflict with a family member over a money issue. How often does this happen? (What was it about?) Can you tell me about another time you had a conflict with a family member that was really hard for you? Tell me about the last time you had a conflict with a friend over a money issue? What was it about?

• In the next few questions, I’m going to ask about times when people asked to borrow money from you and the different ways you responded.

  • Tell me the last time that you were asked for money from a family or friend but you quickly said no.

  • When was the last time that you were asked for money from a family or friend but you almost said no? (In other words, you were close to saying no, but you said yes instead.)

  • When was the last time that you were asked for money from a family or friend but you quickly said yes?

Before asking about conflicts, we asked a more general question: “Some people have asked family or friends for loans. Is that true for you?” When we asked about the last time the individual had had a conflict with a family member over money, these individuals often talked about either giving or receiving a loan that was not repaid. They also described borrowers as lethargically or partially repaying loans and having loan requests harshly denied. Such brusque denials were almost never justified, according to the would-be borrowers, in style if not in content. It was fine to say no, it just had to be done in “the right way.” We then used the question about conflicts to better understand when individuals felt that they had to be careful or alert when dealing with their social ties. By asking about those moments when they almost denied a loan request, we stumbled upon a set of strategies that allowed lenders to extend a partial loan or to delay providing a loan to a family member or a friend.

The clients at Mission Asset Fund participated in online (and in person) financial education seminars; therefore, we expected them to be able to reflect on their emotional responses and on their habitual reactions to requests for loans. Because interviewees tend to portray themselves in the best possible light, we had to concern ourselves with social desirability bias in the reporting of how individuals managed their budgets and their decisions to take on loans (formal and informal) or to lend informally to family and friends. MAF clients also discussed their use of payday loans, pawnshops, rent-to-own, store credit cards (revolving accounts), debit cards, and missed payments on some bills in order to secure needed cash. According to MAF’s administrative data, the 399 new clients who came to MAF in 2017 reported in their in-take forms that they had used loans from family and friends (11 percent), payday loans (10 percent), informal rotating and credit associations (23 percent), and other products. We suspect that both loans from family and friends as well as payday loans are under-reported. Indeed, when we talked with interviewees about their past experiences with payday lenders and other stigmatized, high-cost financial services, some would initially respond as if reciting answers to a test on why payday lenders are bad but would eventually explain that they used a short-term lender (not as bad as a regular payday lender). In short, they enacted a competent self (sometimes doing so as if performing before an audience) even when admitting to past behaviors that they and others deemed unwise.

The coding and interpreting of interviews occurred through an abductive, iterative process that privileged theories of negative social capital and relational work. The interviews were conducted over a three-month period in 2015; each interview lasted from 30 to 90 minutes, with the median interview taking about an hour. The resulting transcripts ran from 20 to 35 pages, providing the research team with over a thousand pages of dialogue. The research team began reading and interpreting transcripts after a week of starting the interviews so that adjustments could be made during the three months of interviewing. As the research team read the transcripts, they held conference calls to discuss new themes as well as contradictions in the interviewees’ testimonies about how they handled their finances. As these themes, contradictions or other puzzles emerged, the research team deliberated over them. The team also discussed initial hunches and puzzles with the staff members at MAF. Before developing the interview questions, one of the members of the research team spent nearly three years visiting MAF where s/he was allowed to shadow staff as they engaged in recruiting clients to the program, as they formed Lending Circles, and in the weekly staff meetings as they discussed challenges to implementation and evaluation.

The Findings

As individuals engage in relational calculations, they make tradeoffs regarding how much money they think they can keep for themselves and how much they can lend to family and friends. They make these calculations while keeping in mind that their economic decisions affect their maintenance, alternation, or dissolution of existing relationships, and they have audiences to which they answer either explicitly or implicitly regarding their decisions. They may not make their financial decisions fully aware of their effects on their relationships but act as if they have internalized the relational implications of their actions.

Obfuscating Denials

Some individuals expressed unease when asked about the last time they had to deny a friend or family member’s request for a loan. “You can’t exactly say no. Not like that.” The most obvious approach is to pretend to have a resource constraint: “I wish I could help, but I don’t have the money.” This is most easily performed for requests by people who are not emotionally close.

Interviewer: Have you ever said no to anybody?

Mike: I have never said no but I’ve lied.

Interviewer: What do you mean you’ve lied?

Mike: I told them I didn’t have it and I had it.

Interviewer: Why did you lie?

Mike: Because I felt like they wasn’t credible.

Interviewer: Do you remember who that last person was that you lied to?

Mike: Some dude I know.

Interviewer: A friend?

Mike: An acquaintance.

Interviewer: Do you remember what they needed the money for?

Mike: Didn’t explain.

Pretending not to have the money to lend becomes less tenable when the requestor is a relative with legitimate, pressing financial needs. One woman, Cristina, describes the delicate relational work and subtle avoidance she practices with her cousin’s wife. They work together, and she keeps borrowing money that she does not repay. Instead of telling her that she cannot borrow any more money, Cristina tries to avoid her and to reduce their emotional closeness. “We still have a relationship, but I’m trying to put some distance between us. She sometimes works with me. But I put up distance because … I’ve felt used…. And at times I feel that she’s indirectly asking me to lend to her. So the relationship has been harmed.” Cristina pretends not to notice that her cousin in-law has financial difficulties and feigns misunderstanding the obvious hints her cousin sends her way. At the same time, her cousin-in-law pretends not to be asking for financial assistance, especially since Cristina has been so generous in the past providing it without being asked (directly). Her primary strategy involves avoiding too much communication and contact, while pretending to be unaware that she is being asked to provide financial assistance. A direct confrontation would be awkward on her and hard on her family. She does not want to cause emotional distress for herself or her loved ones or be portrayed as a selfish, uncaring person, but she also wants to guard her scarce resources.

Others avoid direct confrontations by waiting for the potential lender to offer a loan. Jonathan recalls letting his brother know that he had joined the Lending Circles program and was trying to get his financial life in order. This seems to have been an attempt to overcome his brother’s perception that Jonathan could not be trusted to use his money wisely and to show that he was engaged in a productive activity (Smith 2010, 38). Jonathan also told him that he was going to visit their bedridden mom and hoped to have some money before the visit since it was going to be Christmas and hoped the ritual significance of the season would make a loan more likely (Wherry 2017). “I was hinting to see if he’d say, ‘I’ll help you.’ [But] he says, ‘Okay, get busy then [making or finding some money].’ So I asked, ‘Aren’t you going?’” Instead of agreeing to go and giving some indication that he would help either his younger brother or their mother directly, he simply replied that he was not going for the visit.

The farce of congeniality fell apart, though, when Jonathan’s sister-in-law involved herself in the conversation. She saw them arguing, just after Jonathan’s brother jibed him with the fact that he did not seem to be able to save up his money to buy a home or to stay renting in the same place for too long. Jonathan insisted his brother was bringing up an old self rather than the more hardworking and stable self that Jonathan had become (symbolically dangling what Jonathan saw as an old sincerity test score over his head, meant to degrade him). In anger, Jonathan returned insult for insult. “I didn’t collect stuff as you did; I collected experiences, but at the end of our lives, when I pass away, I’ll take more than you…. You have your things [only]…. But many people will come to my funeral; to yours, perhaps three.” As Jonathan’s brother and his wife abruptly walked away and into their house, she yelled back, “You’re nothing. People can care less if they see you somewhere.” Jonathan cried during the interview as he recounted the humiliation.

Obfuscation can take a turn for the worse when the lender feels manipulated by it. Martha described how she cut ties with her mother after refusing to pay her mother’s property taxes. The situation unfolded in 2004 when Martha received a Christmas card from her mother with a five-dollar gift placed inside it. The card and the monetary gift immediately raised suspicion because her mother seldom sent her cards and never money. The card felt like a trick (insincere), a way of forcing Martha to call with thanks. When she called her mother to express her appreciation for the thoughtful gesture, the ask came. “I need $6,000 dollars. The house is in foreclosure!” Her mom had failed to pay property taxes for a long time. “On top of that, there were six adults living in that house. Why didn’t she just ask all of them to pitch in? I told her, ‘You’ll have to figure this out on your own.’” Her refusal to help her mother was tantamount to cutting her off. They still do not speak.

Negotiating the Terms of the Request

Juan is in his early twenties, and he reports that other people seldom ask him for a loan. When they do, however, he tries to find a way of testing whether the lender really needs the money and tries to offer the lender an opportunity to let him off the hook. He explains that he feels awkward about saying no to his best friend, but he will identify an impending expense that both he and his friend consider important.

Juan: I don’t think anyone’s really asked me for money, besides one person.

Interviewer: Have you ever said no to this person?

Juan: No, because it was a really good friend of mine. I said yeah. I told her, ‘On this date, I have to do this and this and this. Hopefully by this month you can pay me back.’ She decided not to take it from me. I think she realized she could do it on her own. But I just had to tell her [the situation]; it was a good friend so I was not going to say no to her and I did have the money. I said yeah, just so long she could pay me back by [this date]…I think it was a span of three or four months or something like that because I knew something was going to come up during that month. That was before I left for Spain so it might have been something with my visa or my plane ticket.

Interviewer: How much did she ask you for?

Juan: I forgot. I want to say $500 or something.

He transformed the request from the lender into an opportunity to negotiate the terms of the loan. He used time (by when the money will be repaid) to indicate that the loan places a burden on him and could get in the way of his meeting a financial need. Without saying no, he indicated that his friend should try other sources and only return if others said no and if her needs merited placing him in jeopardy of not accomplishing an important task.

Buying time also allows the lender to check-out the validity of a loan request. For example, Maria’s brother asked to borrow $800. He claimed that he needed help paying his lawyer for documents. Initially, she told him that she would let him have the money but that she would bring it to him later. In the meantime, the wife of her brother called Maria to warn her, “Don’t give it to him. Your brother is still the same. He won’t change.” In short, he is not sincere. Maria had to confront her brother, not only for self-satisfaction but also for the sake of other relatives who would want to know what was going on with her and her brother. “Look, there’s no need to lie to me. If you need the money, you better tell me the truth.” She denied him his request but assured him that in the near future, she would be happy to help him so long as he started “coming clean” about why he needed the money. By taking the moral high ground, she places the risk of embarrassment on the borrower because of what he did not do (tell the truth) rather than because of her own financial circumstances or her anger with his past behaviors.

Rather than make a borrower feel awkward for requesting too much money, a lender can stretch out the time it takes to deliver the loan so that the borrower can reconsider the amount of the request without being told to do so. Jay explained, “My best friend, her daughter, [needed a loan]. [My best friend is] cool though.. She’s let me borrow money once or twice. She’s nice. We are best friends.” The request for a loan came by text from her daughter asking for a $700 deposit for her apartment at school. “I said, ‘Okay, yeah.’ Then I took a while transferring it, whatever, I think like a day or two. Then she said, ‘Hold on, only half the money, and I’m going to pay you back.’ …I transferred I think like $300, or $350, that I let her borrow.” Without saying so (either to the interviewer or to himself), Jay communicated a reluctance to lend the money, though he does not doubt that the money is needed by a sincere individual (sincerity test). If Jay refuses to show generosity to his friend’s daughter, he will risk embarrassment as others in his orbit discover his cold calculation, and he risks the shame of his best friend thinking that he is not as well off or as reliable as he would like to be.

Sometimes the lender can negotiate the payback of a loan by bringing to the top of mind how the timing of the payback will affect a third party about whom the lender and borrower care deeply. Jesùs is in his late thirties, and his sister-in-law has asked him for a loan so that she can fix her car. Although he struggles to support his own family financially, he does not like to tell her no. “I mean, if you need to borrow money and it’s for something serious like school or your car or something like that, and if I have it and it’s not going to affect my family in a negative way, then I’ll let you borrow it. But I always ask, ‘When should I expect this money back?’” He knows that he cannot count on his sister-in-law to pay him back on time or at all. “I had to get on her and ride her a couple of times, like, ‘Hey, where is my money?’” He appealed to her concerns for her sister (his wife) and stated that Christmas was coming and he had put her sister’s gift on layaway. He told her that he only owed $132 dollars to retrieve it from layaway in time for Christmas, but he made sure that the amount left for layaway matched the amount of money his sister-in-law still owed him. She promised but failed to get the money to him within three days, in time for Christmas. Perhaps she did not have the money or she didn’t believe him, but she failed to pay him. Jesùs had to find another way to get his wife’s gift out of layaway on time.

Saying No to the Sincere Needs

Even when siblings have sincere needs, they may not be doing all they can to avoid asking for a loan. The assessment of sincerity, however, goes beyond whether they are only requesting what they need and whether they will do their best to repay. Are their other actions manifesting a spirit of reciprocity that honors the relationship? Consider Mary who practices negative reciprocity to avoid extending additional loans to her sister and to retaliate against a past violation of reciprocity norms. Mary realizes that her sister has real financial needs, so the likelihood of monetary repayment does not bother her as much as the other reciprocal actions her sister has the capacity to perform. Mary explains that her sister refused to help her daughter in even a token way. As far as Mary is concerned, she could have provided a partial gift to signal her care and respect for her niece whose mother had so often helped the family. This token of appreciation would have also acknowledged all the help she had given over the years. Mary had the justification she needed to “pay her back” by cutting her off.

Mary: I used to lend money to my sister. She would borrow from me, and I would give her from the little I had, but she never paid me back. And the same thing happened with my sister-in-law, my brother’s wife, and she doesn’t even talk to me anymore.

Interviewer: None of them talk to you?

Mary: Because they asked for money and I lent it to them, and when I wanted the money because I didn’t have any… they wouldn’t pay me back. So, as from then they have never called me or anything. On one occasion when my daughter was in need I told her to ask them for assistance because they owed me money, but they never helped her. They no longer talk or visit my kids.

She suggests that for the sake of the kids, lending without full repayment was not enough to terminate the relationship or to deny a loan. As she decides to stop giving her sister loans, she has also triggered the termination of their strained relationship.

Looking at negative reciprocity from the perspective of the borrower, we return to the case of Jonathan. He felt humiliated by his brother and his sister-in-law who rejected a loan request Jonathan made for the sake of his mother. He and his older brother share her nursing costs 50/50, even though his brother earns much more money than does Jonathan. According to Jonathan, his brother insisted on equality matching, though he believed his brother should have recognized the vast difference in resources each had and taken on a greater share of the costs (See Rai and Fiske 2011). Jonathan already felt embarrassed about asking for help from his older brother, though he claimed that it was Christmas time and he was on his way to visit their mother, so presumably the loan would help him bring Christmas cheer to her. Adding to the sting of the denial is the fact that his brother can afford it: Jonathan believes that his brother has credit cards with no limit and knows that he owns several properties that generate rental income. “I told my older brother, ‘Look, I know you don’t have the money [maybe in cash], but you got credit. We can take a loan and I’ll pay for it.’” But his brother did not trust him to fulfill the obligation. In response, Jonathan obtained the money through loan sharks. And Jonathan retaliated with harsh insults to both his brother and his “meddling” wife, noting that he does not even exercise sympathy for their mother who can no longer do for herself.

The humiliation endured in the past from being denied a loan can orient the potential lender’s behavior in the future. While we did not incur cases of a past denial being used to justify a salient memory of recently denying a loan to others, we did encounter discussions of individuals feeling that they could not rely on family and friends, and, therefore, had no obligations to anyone. One woman explained how she incurred a great deal of student debt, and how her relatives used her educational ambitions as a way of ridiculing her when she went to them asking for a personal loan. It was as if they were punishing her for wanting to be more than she was (“a wannabe”). “It gets thrown up in your face. [They say,] ‘You have all these degrees, why can’t you afford this, or why are you homeless?’ That was when I was homeless with the kids.” Either her relatives denied her help or berated her for spending so much money to obtain degrees that did not pay a return. Although her relatives do not ask her for money given the state she is in, she feels that her past experiences with them has created protection against a sense of obligation to them that she might have felt otherwise.

Yielding to Negative Social Capital?

Sometimes lenders provide family and friends with loans simply because they want to, but at other times they find themselves surrendering to situations that seem to be beyond the borrower’s control. Those who give willingly and with joy should be viewed differently from those who give with reluctance under pressure (Cain, Dana, and Newman 2014, 506). And how embarrassed or how awkward an individual feels affects the likelihood that she give in to the pressure to help (Bohns and Flynn 2010; Flynn and Lake 2008). First, when a life-threatening situation emerges unexpectedly, the lender feels a general sense of obligation to help without any expectation that the loan will be repaid. In fact, lender and borrower describe the gift as a loan so that the borrower can maintain his sense of dignity and control. Second, when a lump sum payment surprisingly arrives, the pressure mounts to provide assistance to family and close friends who have experienced an unexpected natural disaster. Finally, there are easily anticipated expenses (routine) that simply cannot be paid, and not paying them results in hunger or homelessness. The lender believes that the borrowers have encountered these circumstances through no fault of their own. Even if borrowers could have done more to improve their plight, the lenders would be engaged in unseemly behavior were they to leave a close family member at risk of eviction. There are also situations where either the lender plays up the severity of the consequences of not giving so that others in her social orbit do not judge her as too soft or the lender expresses joy in simply being able to let their child have a treat or to see a loved one go on a much needed vacation or adventure.

Among our sample, it is not unusual to lend to family members without the expectation of repayment. At the time the loan is made, some people know that they are unlikely to be repaid and consider the loan a gift, but they do not feel it appropriate to tell a friend or a younger brother, for example, that they know he will be unable or unlikely to repay the loan. A similar dynamic unfolds for a loan to a co-worker facing a life-threatening situation. Simon said, “My friend was going through a really bad situation. He has cancer, and he was behind his bills, so I let him borrow $200…. That was four months ago.” When asked whether the friend had paid him back, Simon replied, “No. I don’t care, because I know he’s going through a really tough time, so for me it’s like I already lost that money.” And Simon won’t ask for it back. Simon is in his late thirties with a prime credit score. He is married with one child but some of his relatives live with him as well. Just before telling us that he had given this gift disguised as a loan to his sick co-worker, he offered an implicit comparison with a request from his wife’s nephew for a $300 loan. His rationale? He could deny a frivolous request from a close tie but not a life-threatening situation from someone who might be described by Desmond (2012) as a disposable tie. And making this explicit comparison while talking to the interviewer affirms that he has taken control of his financial life and can make decisions that the interviewer and others will consider sound.

Another moment when an individual disguised a gift as a loan was when helping his retired father. The roof needed repair and his father was on a fixed income. His father asked for a loan, though he initially insisted on simply giving his father the money. The lender relented in defining the money as a loan, acknowledging that his father could still take care of his own affairs. When his father did not repay the loan, they simply did not talk about it, as if it never happened. There was much more that they could focus on as family members, so they never got around to the loan.

Next, comes the classic situation of the lump sum payment that quickly dissipates due to social pressure from kin. A young woman named Jessica described her father’s trip to an Asian country where he played cards in the casino and actually won the jackpot. It was about $20,000 in US dollars. “This was after Hurricane Katrina, by the way, and [many of] his family members [in Louisiana] started to beg him, like, ‘Oh, hey, help me out here, help me out.’ And my dad was kind of, you know, he’s weak. So he gave in and all the money was gone right away.” Jessica seemed especially angry that the needs and requests from extended family members seemed to take precedent over her existing university debts and suggested that some of their requests might have been exaggerated in order to extract some of her father’s winnings. She also contrasted the support he gave to their kin with the support she wanted from him: “Well damn, shit! I’m your daughter! Don’t you remember, I have like… a ton of debt. You couldn’t give me some of that?” She managed to reduce her college debt and to build her credit score, but she felt that her father’s kindness and sense of obligation to extended family were too easily manipulated. She intends to retaliate in the future by withholding support, envisioning her lending practices as a foil to her father’s.

By contrast, Paul, a Latino man in his late thirties, explained why he found it inconceivable to deny his younger brother a loan. Paul himself has a professional, secure job and a prime credit score. He does not see helping family as antithetical to maintaining a high credit score and seems proud to be able to guard the wellbeing of his younger sibling.

Paul: Oh, my God. I don’t think I’ve ever said no before.

Interviewer: You’ve never said no?

Paul: No. I can’t.

Interviewer: Okay. You can’t say no?

Paul: No. Especially when it comes to my youngest brother. He always seems to find himself in financial difficulties.

Interviewer: What kinds of things does he ask to use the money for?

Paul: It’s funny, it’s always the same. Rent and food. I don’t really ask many questions. If I can, I can. I usually can [give him the money].

Interviewer: About how often would you say he asks you?

Paul: Oh, a few times a year. Not too major. Not that much money, either. But, still…

Interviewer: And does he ask to borrow it or does he ask that you gift it to him?

Paul: No, he asks to borrow. But, after a while, it kind of becomes a habit, I suppose.

Interviewer: Has he ever paid you back?

Paul: No. I’m still waiting.

Interviewer: Have you ever asked him to pay you back?

Paul: No.

Some individuals expressed joy in being able to help loved ones, whether or not the loved one is a good steward of resources. Having made sacrifices to accumulate some savings or to have access to credit means that the individual can “splurge” every now and then when providing assistance to others. What good are savings and hard work if they can’t be enjoyed?

Conclusion

For lenders, “getting to no” is not easy, and, in some cases, they can only “get to no” by not doing so. Lenders feel pressure from friends and kin as they evaluate the seriousness of the requests; hence, neither they nor the organizations trying to help them would be surprised by the core findings in economic sociology that ongoing social relationships shape economic actions as well as the interpretation of what those actions mean (Granovetter 1985; Portes and Sensenbrenner 1993; Swedberg and Granovetter 1992; Zelizer 1989). What is a good debt, a worthy debtor, or a reasonable basis for saying no? The answer goes beyond the hyperbolic discounting of how much helping others now will hurt the lender in the future (Laibson 1997). What is harder to specify, however, is how the sense that a request cannot be ignored comes from social rules that remain invisible until the individual considers violating what is expected of her. In that moment, the individual convicts herself internally as she experiences the weight of the moral prohibition, or she finds that socially significant others disapprove and punish her (Durkheim 1982 [1895]).

Our qualitative study reveals how individuals enact obfuscation, what real-world contingencies impinge on their enactments, and how they anticipate and interpret audience reactions to attempts to obfuscate (see quantitative counterpart in Schilke and Rossman forthcoming). Our findings also speak to more abstract patterns and contingencies of exchange where indirect asks are made and where indirect refusals or negotiations unfold. While we have located these patterns among low- and moderate-income individuals considering loan and gift requests from family and friends, we recognize that the general patterns may apply to a number of exchanges where the needs of the more vulnerable actor in the exchange place constraints on the freedom of the benefactor to say no. Moreover, this paper provides a theoretical toolkit for understanding such activities as anonymous (versus named) donations, social investors and their beneficiaries, programmatic efforts to improve the financial health of low- and moderate-income families, face-to-face versus online (formal sector) lending, the awkwardness of loan and gift requests from caregivers, conflicts over transfers in intergenerational caregiving arrangements, and transactional friendships that develop in workplaces or in political bodies. With more qualitative and quantitative work, we should be able to discern the likelihood of obfuscation strategies and indirect refusals for differently positioned actors and how the timing of their requests depend on other resources, infrastructures, and audiences (Schilke and Rossman, forthcoming). For example, do borrowers make their requests after using different sets of formal and informal financial services. How might the use of other services (and the infrastructures that deliver those services) help requestors counteract the obfuscation strategies used by informal lenders? What types of financial services and infrastructures make it harder or easier for potential donors to credibly slow down an exchange? As these questions are answered systematically, we will better understand when and how exchanges are blocked, mediated, or otherwise modified.

The propositions we develop in this study deepen our understanding of negative social capital, enabling us to revisit the findings in O’Brien (2012) and Portes (1998) to ask how relational work generates variation in the pressure to lend and to donate to group members. While awkwardness, obfuscation, and negative reciprocity alter these pressures, they also point to the processual development of pressure and resistance to it. Beyond the position in the network structure (which offers a snapshot of what negative social capital looks like), this paper asks how the dynamic performance of awkwardness or its dramaturgical diminishment (through obfuscation) alters the power of friends and kin to make demands on potential benefactors. In short, lenders exercise agency as they perform their genuinely caring selves or their clueless foils. These performances rely on negative reciprocity as a deterrent to poor performances and draw on the moral claims that lenders and borrowers make about what the loans (or their denials) mean regarding who should give and who should take. Obtaining a payday loan, for example, might follow the humiliation of a family member refusing to help and belittling the requestor as insincere or irresponsible. Likewise, a borrower might pursue high-cost small dollar credit proactively, to avoid the anticipated humiliation of a warm personal relationship turning cold. The centrality of their relationships means that policies and programs that make it easier for friends and family to help one another (and that provide potential lenders with plausible deniability when delaying assistance) will make it easier for potential borrowers to ask for loans and for them to re-think how much money they really need to borrow from any one family member or friend. In short, informal lenders and borrowers play the loan decision as a fine relational negotiation and as a martial art, juggling affect, relationship concerns, and moral claims, sometimes, with aplomb.

About the Authors

Frederick F. Wherry is a Professor of Sociology at Princeton University. He served as the 2018 president of the Social Science History Association (ssha.org) and past chair of both the Economic Sociology and the Consumers and Consumption Sections of the American Sociological Association. Wherry, Seefeldt, and Alvarez are the authors of Credit Where It’s Due: Rethinking Financial Citizenship (New York: Russell Sage Foundation, forthcoming 2019). He is also the author or editor of nine other books and volumes.

Kristin S. Seefeldt is an Associate Professor of Social Work and Public Policy at the University of Michigan. Her most recent books are Abandoned Families: Social Isolation in the Twenty-First Century (New York: Russell Sage Foundation Press, 2016) and America’s Poor and the Great Recession, co-authored with John D. Graham (Bloomington: Indiana University Press, 2013).

Anthony S. Alvarez is an Assistant Professor of Sociology at California State University, Fullerton. His work primarily focuses on economic sociology, poverty/inequality, and social policy.

Author notes

Funding for the study came from the Behavioral Economics Program of the Russell Sage Foundation, the JPMorgan Chase Foundation, and the Office of the Provost at Yale University. Marlene Orozco (Stanford University, PhD candidate) served as primary interviewer for the project, and staff members at Mission Asset Fund provided substantial support for the project, especially from Aparna Ananthasubramaniam (research coordinator at Mission Asset Fund), Jeremy Jacob (former research coordinator), Tara Robinson, Daniela Salas, Mohan Kanungo, Doris Vasquez, and the entire MAF team. We especially thank MAF’s founder and executive director José Quiñonez and the generosity of the interviewees with whom this project would not have been possible.