An Analysis of Financial Stress Indicators on Mental Health Levels During COVID-19 in the United States

Abstract

This thesis studies the impact of financial stress indicators on levels of mental health during the COVID-19 pandemic through the study of cross-sectional data from June 2020 to February 2023. Financial stress is specified by individuals’ use of credit cards or loans, savings or selling assets, borrowing money from friends or family, unemployment insurance benefits, stimulus check payments, and other savings from deferred payments. Mental health is measured by respondents’ levels of worry, anxiety, depression, loss of interest in things, and aggregate mental health status. This study implements two models; one examines the financial stressors’ impacts on mental health for the entire pandemic period and the other divides the pandemic into two periods, during pandemic restrictions and post pandemic restrictions, to examine the same effects. The results show that financial stress provides negative impacts on mental health levels for all periods of the pandemic. The study also highlights that the use of savings and taking loans through credit cards or borrowed money have greater negative effects on levels of mental health than the use of government aid (unemployment and stimulus payments). When examining two periods of COVID, the results signify that most financial sources had more impact on poor levels of mental health during pandemic restrictions than after. The analysis of this research suggests that the pandemic’s effects on worsening individuals’ financial stability are correlated with lower mental health levels. This study also implies that government assistance during times of economic upheaval positively contributes to improving financial resources for individuals and could potentially indicate better psychological well-being. The findings show that changes in mental health were more impacted during the time of severe pandemic challenges, alluding to a potential need for more intervention during times of duress. This research furthers existing literature by expanding on the limited studies of financial burden impacts on mental health during the pandemic in the United States.