By their very nature, pandemics are known by scholars to cause emotional distress. Pandemics create uncertainty, ambiguity, feelings of loss of control, and internal (i.e., psychophysiological) symptoms, such as anger, anxiety, and depression (Ensel and Lin 1991; Pearlin et al. 1981). The COVID-19 pandemic outbreak that began in late 2019 and accelerated into early 2020 (World Health Organization 2020) led policymakers worldwide to respond by implementing policies such as social distancing, the closing of schools, family gathering restrictions, work-at-home mandates, and travel restrictions. Although unknown at the time, these policies resulted in an increase in negative psychological outcomes, including psychological distress (Shanahan et al. 2020; Van Rheenen et al. 2020).

Social distancing requirements implemented in 2020 led to widespread psychological distress that resulted in generalized stress and anger. The Office for National Statistics (2020) in the United Kingdom reported that about 72% of the UK’s population was concerned about the impact COVID-19 would have on their lives, with many reporting high levels of anxiety (32%), diminished well-being (43%), and loneliness (23%). In addition, countries such as Italy and Spain that were deeply affected by COVID-19 observed societal impacts that went beyond physical symptomologies (e.g., González-Sanguino et al. 2020; Odriozola-Gonzalez et al. 2020; Orgilés et al. 2020).

It is now clear that there was comorbidity between the physiological and mental effects of COVID-19 and economic stress. Many households experienced unemployment, economic disruptions, and investment asset price volatility at the height of the pandemic (Akhtaruzzaman et al. 2021). In one study that used a nationally representative sample of U.S. adults, researchers found that the increase in psychological distress associated with COVID-19 was caused more by economic stressors than by fear of contagion among those aged 60 years or younger (Breslau et al. 2021). The work of Breslau et al. (2021) hints at the strong likelihood that some of the psychological syndromes associated with COVID-19 were related, in part, to financial stress.

Private employers reacted to the pandemic in a variety of ways. Some employers responded to decreased consumer demand for products and services by furloughing employees. This had a significant effect on the labor market, as it adversely impacted consumption patterns, the allocation of financial resources, and economic activity, leading to more significant financial stress for a majority of the population. Thayer and Gildner (2021) found that 43% of those living in the United States during the pandemic were worried about their financial situation.

The linkages between disease (both functional and psychological) and financial stress, while very apparent during the pandemic, were not unique to the period ranging from 2019 to 2022. Negative outcomes associated with global health crises have been observed at other times as well. Haacker (2004) studied how the economic costs of the HIV/AIDS pandemic affected human life. Haacker pointed out that permanent changes in consumer behavior due to the HIV/AIDS pandemic created a tremendous challenge to the global economy, resulting in a decline in consumption and domestic demand worldwide. Similarly, Santaeulalia-Llopis (2008) investigated the impact of the HIV/AIDS epidemic on economic growth, finding that AIDS delayed industrialization for nearly a century and reduced income per capita by 12% in countries where the prevalence of the disease was at its highest. These studies suggest that pandemics bring changes to the global economy by triggering problematic financial behavior that is linked to financial stress (e.g., a pandemic can shift the risk preference of a society, which can reduce human economic activity (Heo et al. 2021; The American Institute of Stress 2020)).

To date, there have been just a handful of empirical investigations into the association between the COVID-19 pandemic and personal financial behavior (Heo et al. 2021; Yazdanparast and Alhenawi 2022). Given the lack of research, it is difficult to clearly define how the pandemic was or continues to be associated with individual and household financial behavior. However, studies that have examined other global financial crises provide some clues to better understand the association. For instance, Leoni (2013) found that the spread of HIV in developing countries was related to a significant increase in bank deposit turnover because of the need to pay for medical treatments. Lagoade-Segot and Leoni (2013) developed a theoretical model showing that the prevalence of large-scale pandemics increases in alignment with the likelihood of a banking industry collapse in developing countries. Similarly, Skoufias (2003) noted that a significant portion of collective loans from micro-financial institutions and banks come under pressure during pandemics due to the systematic negative effect of the health crisis on all group members. The societal impact of a pandemic can reduce the ability of households to make loan repayments.

A pandemic can also affect the use of other household financial products. Insurance ownership, for example, needs to be in place to deal with financial emergencies, especially crises resulting from health problems (Gangopadhyaya and Garrett 2020). Most workers in the United States receive health insurance benefits through their employer or their spouse’s employer. If they (or their spouse) lose their job, they are likely to lose job-based insurance, although they can retain insurance coverage over a temporary period through the Consolidated Omnibus Budget Reconciliation Act (COBRA). Gangopadhyaya and Garrett (2020) noted that the COVID-19 crisis highlights the possibility that millions of people might not only lose their livelihoods but also their ability to pay for medical bills. As the insurance literature suggests, the knock-on effects of economic crises that emerge after a pandemic are closely linked to health issues beyond end-of-life concerns. For this reason, this study was designed to determine whether health status and insurance status are associated with differences in financial stress and financial behavior.

This study was also designed to determine if financial stress observed during the pandemic, between 2019 and 2021, correlates with household financial capacity. This is important because of the large variance in financial capacity observed at the household level. For instance, high-income households have a higher degree of immunity from supply and demand shocks, while low-wage workers are much more economically vulnerable (Cutler 2020). When viewed this way, the COVID-19 pandemic can be seen as a mechanism that accelerated and worsened measures of income inequality. That is, the gap between the rich and the poor widened during and immediately after the pandemic (Heo et al. 2021). Heo et al. (2021) found that COVID-19 shifted downward the financial risk tolerance of households, especially for low-income financial decision-makers. Heo et al. argued that, over time, this shift may increase the income and wealth gap between high-income and low-income households.

In the context of pandemics, researchers have taken an interest in gaining a better understanding of the potential associations between demographic characteristics and financial stress experienced at different points in time. Of particular interest is the relationship between demographic attributes, such as gender, age, marital status, income level, educational attainment, number of dependents, employment status, and the experience of financial stress. Notably, gender, despite being acknowledged as a multidimensional construct, occupies a fundamental role in influencing an individual’s ability to cope with stressors and their ensuing responses (Geary 2010; Matsuno and Budge 2017). A significant portion of the existing literature on pandemics, with a particular focus on the COVID-19 pandemic, has concentrated on discerning behavioral distinctions between males and females, building upon prior studies that explored gender-based variations during disease outbreaks. For instance, during the Ebola outbreak in Africa, women faced disproportionately heightened responsibilities in caregiving, partly due to their increased roles as primary caregivers (Androsik 2020; Park et al. 2020).

Age is another salient factor in predicting individuals’ reactions to stressors and their perception of health threats amidst a pandemic. Age is a useful descriptor because of the capacity of older individuals to contextualize novel stressors and exhibit heightened resilience towards disease and mortality concerns (Bacon and Corr 2020; Cicirelli 1999). This was evidenced by an inverse correlation between age and COVID-19-related stress in a sample of American adults, with younger individuals reporting higher stress levels (Park et al. 2020). Park et al.’s (2020) findings imply that adolescents may adopt less adaptive coping strategies, potentially leading to adverse consequences (Atchison et al. 2020).

Moreover, some researchers have identified other demographic factors, including race/ethnicity, socioeconomic status, and parental status, as potential risk indicators when adopting inappropriate responses during a pandemic (e.g., Park et al. 2020). However, these studies have not thoroughly explored the correlation between demographic factors and how individuals’ coping responses to COVID-19 may be linked to their financial behavior or stress level. Extensive research, however, has shown that the relationship between demographic characteristics and health-related behaviors can be mediated (Cheng and Furnham 2003; Nabi et al. 2008), implying that demographic attributes are intertwined with individuals’ health-related behaviors during national health crises, ultimately manifesting as financial stress.

In summation, demographic factors exhibit a discernible connection with the psychological responses to financial challenges exhibited by households. This is true historically and during the COVID-19 pandemic.

As described above, the COVID-19 pandemic created a substantial negative impact on society and households, both in the short term and the long term. This impact has manifested in various ways, including heightened anxiety related to health issues, job insecurity, financial instability, elevated stress levels, and increased conflicts within couples due to self-quarantine and telecommuting measures. Additionally, individuals have encountered challenges related to credit card payments, escalating debts, and a global economy that has experienced an unprecedented slowdown (Mastropietro et al. 2020; Phan and Narayan 2020; Remuzzi and Remuzzi 2020). Consequently, the amplification of financial stress resulting from the COVID-19 pandemic can be expected to have a substantial impact on individuals’ financial well-being today and into the future (Brewer and Gardiner 2020; Brodeur et al. 2021).

The issue of financial stress is not unique to the COVID-19 pandemic. Financial stress is known to have arisen during previous economic and global health crises. For instance, researchers who studied the 2008 global financial crisis observed an increase in biased financial decision making at the household level, which likely resulted in and from increased stress levels (Apostolakis and Van Dijk 2018). Apostolakis and Van Dijk (2018) found that sociological factors such as one’s living situation, care provisions, health conditions, and loneliness are linked to feelings of financial stress, impaired financial decision making, and other problematic household financial outcomes. It has been well established in the literature that global health crises, such as the COVID-19 pandemic, cause people to experience emotional distress, encompassing symptoms such as anxiety, depression, and anger (Ensel and Lin 1991). Thus, it can be postulated that the outbreak of the COVID-19 pandemic induced stress, which was accompanied by a spectrum of negative emotions as well as concerns regarding personal and familial health and economic losses (Forbes et al. 2016).

However, even though researchers and policymakers acknowledge the relationship between health crises and stress reactions, comprehensive descriptions of the association are lacking in the current body of literature. For example, there are only a handful of studies that have reported on the socioeconomic or socio-demographic factors associated with financial stress. Nearly all of these studies suggest that stress is felt more acutely by lower-income households and individuals with a lower net wealth (Guan et al. 2022). In addition to income and wealth, other researchers have documented a link between financial worries and psychological distress and other socio-demographic factors, including gender, marital status, employment, and education (e.g., Ryu and Fan 2023). Based on the extant literature, this study controlled for these and other socioeconomic or sociodemographic factors.