The Generative Mechanisms of Financial Strain and Financial Well-Being: A Critical Realist Analysis of Ideology and Difference

Abstract

Background: Rapid, strategic action is required to mitigate the negative and unequal impact of the COVID-19 pandemic on the financial well-being (FWB) of global populations. Personal financial strain (FS) worsened most significantly among systematically excluded groups. Targeted government- and community-led initiatives are needed to address these inequities. The purpose of this applied research was to identify what works for whom, under what conditions, and why in relation to community and government initiatives that promote personal and household FWB and/or address FS in high income economies. Methods: We employed a critical realist analysis to literature that reported on FWB/FS initiatives in high income countries. This included initiatives introduced in response to the pandemic as well as those that began prior to the pandemic. We included sources based on a rapid review. We coded academic, published literature (n=39) and practice-based (n=36) reports abductively to uncover generative mechanisms – i.e., underlying, foundational factors related to community or government initiatives that either constrained and/or enabled FWB and FS. Results: We identified two generative mechanisms: 1. neoliberal ideology; and, 2. social equity ideology. A third mechanism, social location (e.g., characteristics of identity, location of residence), cut across the two ideologies and demonstrated for whom the initiatives worked (or did not) in what circumstances. Neoliberal ideology (i.e., individual responsibility) dominated initiative designs, which limited the positive impact on FS. This was particularly true for people who occupied systematically excluded social locations (e.g., low-income young mothers). Social equity-based initiatives were less common within the literature, yet mostly had a positive impact on FWB and produced equitable outcomes. Conclusion: Equity-centric initiatives are required to improve FWB and reduce FS among systemically excluded and marginalized groups. These findings are of relevance now as nations strive for financial recovery in the face of the ongoing global pandemic.

Australian and Canadian financial wellbeing policy landscape during COVID-19: An equity-informed policy scan

“…The policy concentration on individual and family finances in both countries during this time mirrors the neoliberal and individualized approach to short-term initiatives responding to people’s urgent, specific, or immediate needs over those that could target long-term changes in the structural determinants of financial strain, poverty, and the social determinants of health. Characterized by its emphasis on free market competition, minimal state intervention, and radical individualism [84] , [85] , [86] neoliberal ideology has become entrenched in the policy-making process and has shaped the platforms in which socioeconomic issues are defined and approached [87] . With an implicit expectation of prevailing individual economic rationality and economic self-interests, the temporary social supports offered by Canada and Australia could be seen to solve the acute financial distress experienced by low- and middle-income people with the ‘shock’ of the pandemic.…”

Financial Capability as a Predictor of Financial Satisfaction among Catholic Higher Education Employees: A Sequential Explanatory Mixed Method Inquiry

“…This is supported by the Human Capital Theory, which suggests that investing in education and training improves job prospects and income levels [71]. Lastly, financial stability provides a sense of security and enables individuals to meet their financial obligations, leading to increased satisfaction with their financial situation [72].…”