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Effects of financial insecurity on social interactions

Author

Listed:
  • Corman, Hope
  • Noonan, Kelly
  • Reichman, Nancy E.
  • Schultz, Jennifer

Abstract

Little is known about the effects of financial insecurity on social interactions despite consistently observed income effects on social capital and a growing recognition of the potential importance of income volatility in affecting hardships, distress, and other aspects of well-being. We use data on women participating in a longitudinal study in the U.S. to investigate the effects of financial insecurity measured along two dimensions (safety nets and hardships) on two types of social interactions (participating in community organizations and having close friends). In auxiliary analyses we explore the potential mediating effects of mental health. We find that safety nets in the form of bank accounts, credit cards, and ability to borrow money increase both participation in organizations and friendships, whereas material hardships decrease friendships but increase participation in organizations. We find no evidence that mental health, as we have measured it, mediates the observed effects of financial insecurity on social interactions, although it has strong and negative independent associations with having close friends.

Suggested Citation

  • Corman, Hope & Noonan, Kelly & Reichman, Nancy E. & Schultz, Jennifer, 2012. "Effects of financial insecurity on social interactions," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 41(5), pages 574-583.
    • Handle: RePEc:eee:soceco:v:41:y:2012:i:5:p:574-583
    DOI: 10.1016/j.socec.2012.05.006
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    References listed on IDEAS

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    1. James X. Sullivan & Lesley Turner & Sheldon Danziger, 2008. "The relationship between income and material hardship," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 27(1), pages 63-81.
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    Cited by:

    1. French, Declan & Vigne, Samuel, 2019. "The causes and consequences of household financial strain: A systematic review," International Review of Financial Analysis, Elsevier, vol. 62(C), pages 150-156.
    2. Jeffrey Anvari-Clark & David Ansong, 2022. "Predicting Financial Well-Being Using the Financial Capability Perspective: The Roles of Financial Shocks, Income Volatility, Financial Products, and Savings Behaviors," Journal of Family and Economic Issues, Springer, vol. 43(4), pages 730-743, December.
    3. Andrzej Woloszyn & Joanna Stanislawska & Romana Głowicka-Woloszyn & Agnieszka Kozera & Anna Rosa, 2021. "Multidimensional Assessment of Polish Farm Household Financial Security by TOPSIS and Generalised Distance Measure," European Research Studies Journal, European Research Studies Journal, vol. 0(4), pages 534-553.
    4. Jeffrey Anvari-Clark & Theda Rose, 2023. "Financial Behavioral Health and Investment Risk Willingness: Implications for the Racial Wealth Gap," IJERPH, MDPI, vol. 20(10), pages 1-29, May.

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