The causes and consequences of household financial strain: A systematic review

Abstract

The 2007-08 financial crisis caused a deep global recession with lasting effects on economies worldwide. Millions of households in developed countries currently report having difficulty making ends meet. In this paper, we systematically review finance and economics research on household financial strain to identify research gaps. We find that economists could make a valuable contribution to this literature. More analysis involving developed economic theory would provide clarity to partial and sometimes contradictory results. Research could explore aspects of the dynamics of financial strain ; heterogeneity in coping strategies and the association with health outcomes. A few themes suggested in other literatures could also be examined such as the relative importance of chronic and acute stress as well as the roles of habituation and sensitization for welfare outcomes.

Over-indebted Households in Poland: Classification Tree Analysis

“…We demonstrate that the probability of being over-indebted is substantially higher among poorly-educated households than among the households with a well-educated reference person. This finding supports the importance of financial knowledge in the occurrence of over-indebtedness (Campbell 2006;French and McKillop 2016). This dependence can be explained by the fact that better-educated persons have a greater ability to evaluate and foresee their economic capacity to repay the debts (Disney and Gathergood 2011;Białowolski et al 2019).…”

The time is now for public health to lead the way on addressing financial strain in Canada

“…It is commonly measured using survey instruments that ask about perceived ability to cover and cope with current household expenses, such as the InCharge Financial Distress/Financial Well-Being Scale (Prawitz et al 2006). Financial strain is not the opposite of financial well-being (or financial health/fitness/wellness), which includes objective and subjective assessments of the present and future (French and Vigne 2019;Weida et al 2020). Instead, it can be understood as part of financial well-being (Netemeyer et al 2018;Weida et al 2020).…”

“…Like poverty, food insecurity, and low income, financial strain is socially patterned. People belonging to underserved groups, lowincome earners, and people who experience poverty often live with continuous cycles and consequences of financial strain due to an inability to meet or go beyond basic needs (French and McKillop 2017;French and Vigne 2019). It is more commonly reported among racialized people (Kahn and Pearlin 2006), mothers (Cruz-Cerdas 2017), and women (Choi et al 2016;Cruz-Cerdas 2017).…”

Household Debt and Household Spending Behavior: Evidence from Malaysia

“…Aside from the above theoretical arguments, the increasing level of household debt in recent decades has raised research interest in the implications of household debts. However, at the micro-level, most of these studies were in the area of psychology and related fields of studies which focused on the impact of household debt on general psychological wellbeing (Dackehag et al 2019;Hojman et al 2016;Turunen & Hiilamo 2014), physiological wellbeing (French & Vigne 2018;Keese & Schmitz 2014;Sweet et al 2012), and family relationships (Cai et al 2020;Dew & Dakin 2011;Dew 2007Dew , 2008. Research in the area of economics mainly concentrated on delinquencies and bankruptcies (Athreya et al 2018;Getter 2003;Gross & Souleles 2002) while the implications of household debt on consumption at the micro-level have received less attention.…”