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. 2021 Apr 13;179:110916. doi: 10.1016/j.paid.2021.110916

Individual differences in behavioural responses to the financial threat posed by the COVID-19 pandemic

Magdalena Adamus a,⁎, Matúš Grežo b
PMCID: PMC9666053  PMID: 36407572

Abstract

Using a representative sample of 400 Slovaks, the present study investigated the mediating role of subjective perception of financial threat to the relation between psychological resources and behavioural responses in the adaptation to financial stress posed by the COVID-19 pandemic. The results of structural equation modelling analyses showed that greater neuroticism and uncertainty intolerance were positively related to aggravated perception of financial threat. This, in turn, led to greater willingness to change consumption patterns and use of mostly problem-focused coping strategies. The model remained robust after controlling for chronic financial hardship moderators, including the absence of savings and indebtedness. In contrast, the acute financial hardship caused by the deterioration of one's financial situation during the COVID-19 pandemic showed to significantly moderate the relation between one's psychological resources and perceived financial threat.

Keywords: Financial threat, Neuroticism, Uncertainty intolerance, Consumption patterns, Coping strategies, COVID-19

1. Introduction

Apart from immediate medical risks, the COVID-19 pandemic posed a great threat to individuals' psychological wellbeing as well as socioeconomic status and, thus, requires an immediate response (Feng et al., 2020). The spread of the disease has resulted in the introduction of containment measures to stop the virus and protect the most vulnerable groups of citizens. However, the measures themselves may have not only social and psychological negative effects (Dubey et al., 2020) but also disturb financial markets and global economy (Ali et al., 2020; Bavel et al., 2020; Shanaev et al., 2020). Consequently, the situation may lead to greater uncertainty about one's socioeconomic status and raise worries about employment and income stability (Mann et al., 2020).

Previous research showed that it is not an individual's actual financial situation per se, that determines behavioural responses to financial hardship. Instead, subjectively perceived financial threat forms the way individuals cope with financial hardship, while the threat perception is shaped by specific psychological resources (Greenglass & Mara, 2012; Marjanovic et al., 2013, Marjanovic et al., 2015). Due to differences in individual psychological resources, people in a similar economic situation may experience different levels of financial threat (Gasiorowska, 2014). Most importantly, experiencing financial threat shapes behavioural responses to financial hardship, like willingness to adjust consumption strategies or using various adaptive and maladaptive coping strategies (Marjanovic et al., 2018).

The study was conducted in mid-May 2020, during the first wave of the pandemic in Slovakia when the economic consequences seemed far more severe than those related to public health. It has been estimated that just in the first quarter of 2020, GDP shrunk by as high as 7% and unemployment rates started to rise, with Slovakia being among the most affected countries (Eurostat). The purpose of the study, thus, was twofold (see Fig. 1 ). First, we aimed to test for a mediating effect of financial threat on the relationship between psychological resources—represented by neuroticism and uncertainty intolerance—and behavioural responses to the economic turmoil caused by the COVID-19 pandemic. The model built directly on the previous research by Marjanovic et al., 2013, Marjanovic et al., 2015, conducted in response to the 2007–2009 global economic recession. Second, the study extended this model by exploring whether the mediating effect of financial threat depends on the level of chronic and acute financial hardship. In other words, we aimed to identify the moderating effect of specific chronic and acute financial hardship indicators that account for the aggravated feelings of financial threat during sudden economic turmoil.

Fig. 1.

Fig. 1

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The moderated mediation model tested in the present study. Note. The model assumes that financial threat mediates the relationship between psychological resources and behavioural responses. Additionally, this mediation should be moderated by acute and chronic financial hardship.

1.1. The conceptualisation of perceived financial threat

Past experiences from the Great Recession brought significant insights into the damaging effects the financial instability and insecure employment may have on individual wellbeing. Experiencing financial hardship, over-indebtedness and losing a job had a direct effect on self-reported health, excess mortality rates, suicide ideation, depression, self-esteem and substance abuse (Bambra & Eikemo, 2009; Fiksenbaum, Marjanovic, Greenglass, & Garcia-Santos, 2017). It has also been established that economic downturn elicited emotional response that affected the relation between objective economic hardship and its devastating impacts on health and wellbeing (de Bruijn & Antonides, 2020; Marjanovic et al., 2013, Marjanovic et al., 2015).

The focal concept in the present study is perceived financial threat defined as a mixture of fear, anxiety and preoccupation with one's financial situation (Marjanovic et al., 2013). These feelings mostly concern uncertainty about the security and stability of one's personal finances (Fiksenbaum, Marjanovic, & Greenglass, 2017). Specifically, Marjanovic et al. (2018) observed that perception of financial threat is related to subjective evaluation of resources as uncertain and insufficient to maintain income and liabilities balanced. This, in turn, fosters the fear that one is not capable to satisfy basic needs. Preliminary studies indicated that, indeed, as a response to the COVID-19 pandemic, people experienced aggravated anxiety about their employment, income stability and whether they will be able to make ends meet (Mann et al., 2020; Tull et al., 2020).

1.2. Predictors of perceived financial threat

Although perceived financial threat is a widespread reaction to the economic turmoil, previous research shows that not all individuals respond to economic stressors in the same way. First, perception of financial threat is well predicted by socioeconomic characteristics as well as acute and chronic financial hardship, including losing a job, wage reduction and indebtedness. As poverty causes stress and negative affect, low income people tend to worry more about their finances (de Bruijn & Antonides, 2020; Haushofer & Fehr, 2014). Marjanovic et al. (2018) showed that acute—as opposed to chronic—economic hardship makes people prone to financial worries, particularly, if they experienced a negative economic shock in the past 12 months. Apart from actual changes in one's socioeconomic situation, appraisal of the threat may be related to subjectively assessed probability of suffering financial losses in the future and may rise with the media coverage about the economic downturn, gloomy prognosis of the economic development and actual damages caused by the crisis in the local economy (Haroon & Rizvi, 2020; Marjanovic et al., 2013). In the context of the COVID-19 pandemic, Tull et al. (2020) noticed that containment measures, such as stay-at-home orders, may also increase concerns about individual incomes and ability to maintain one's financial status.

Second, as Greenglass and Mara (2012) and Fiksenbaum et al. (2017) outline, there are certain characteristics that are likely to make people more anxious about their finances. Specifically, Marjanovic et al. (2013) observed that an individual disposition to worry, ruminate and feel anxious positively correlated with financial anxiety, i.e., people who generally worry more, tend to be also preoccupied with their financial situation. The findings were confirmed by Xu et al. (2015) among adolescents and, more recently, by Mann et al. (2020), who found that in the context of the COVID-19 pandemic, neuroticism makes people more prone to financial distress. Gasiorowska (2014) confirmed that money anxiety is related to neuroticism, trait anxiety, but also to ambiguity intolerance making people with such individual characteristics more prone to negative effects of the economic hardship. Finally, Fiksenbaum et al. (2017) confirmed that uncertainty intolerance is related to aggravated experience of financial threat.

1.3. Behavioural responses to the perception of financial threat

Financial threat has far-reaching effects on everyday functioning of individuals. Specifically, severe anxiety may lead to adoption of maladaptive consumption and coping strategies, including self-accusation, resignation, gambling and alcohol and drug abuse. For example, Holmgren et al. (2019) observed that young, over-indebted Swedes tended to get involved in maladaptive coping behaviours more and such behaviours predicted occurrence of mental illness. Marjanovic et al. (2015) claim, the maladaptive responses to financial threat are not only psychologically or socially harmful, but also make it more difficult to overcome economic hardship both at individual and social level.

In the context of the COVID-19 pandemic, it has been observed that people started to change their consumption patterns. For example, at the beginning of the pandemic, US consumers increased household spending by 845%, nearly immediately emptying shop shelves of disinfectants, preserved foods and even water (Kirk & Rifkin, 2020). In line with these observations, Garbe et al. (2020) indicated that stockpiling behaviour under threat may be related to certain personality dimensions such as neuroticism, conscientiousness or lack of solidarity. Finally, Marjanovic et al. (2018) observed that individuals experiencing acute economic hardship and financial threat were more willing to change their consumption patterns, like cutting expenses, reducing debts, and seeking additional sources of income.

2. Model and hypotheses

The present study extends previous research by Marjanovic et al., 2013, Marjanovic et al., 2015 by providing a comprehensive perspective on how low psychological resources make people more vulnerable to the financial threat caused by the COVID-19 pandemic. Additionally, the study investigated how the perceived financial threat shapes people's behavioural responses. We were interested, whether feelings of financial threat lead to the changes in consumption patterns and which coping strategies people use when facing financial hardship.

We formulated a mediation model consisting of two latent and one observable construct. First, neuroticism and uncertainty intolerance jointly represented the construct of psychological resources as a predicting variable. The second construct of behavioural responses—consisting of willingness to change consumption patterns and coping strategies—represented the outcome variable in the current investigation. Finally, we examined financial threat as a mediator of the relationship between the two latent constructs. Based on findings of Mann et al. (2020) and Fiksenbaum et al. (2017), we hypothesised that individuals low in psychological resources perceive financial threat posed by the COVID-19 pandemic as more severe (H1). In line with the study by Marjanovic et al. (2018), we expected that perceived financial threat predicts behavioural changes, namely the greater willingness to change consumption patterns and using both adaptive and maladaptive coping strategies to reduce the financial hardship (H2).Following Marjanovic et al., 2013, Marjanovic et al., 2015, we assumed that perceived financial threat mediates the relation between psychological resources and behavioural responses (H3). Finally, we have also extended the mediation model by investigating whether acute financial hardship moderates the relationship between psychological resources and perceived financial threat. The final moderated-mediation model is shown in Fig. 1.

3. Method

3.1. Participants and procedure

A total of 400 Slovaks (208 women) aged 18–81 participated in the study (M age = 44.52; SD age = 16.07). Participation was voluntary and anonymous. The data were collected by a research agency via an online survey hosted on Qualtrics. The data collection was governed by the ESOMAR code. Participants were not deceived at any point of the study. The agency provided incentives for participants consistent with local market conditions. Participants were informed about their right to remain anonymous and to withdraw from the study at any time. After signing an informed consent form and reading general instructions, participants filled out a sociodemographic questionnaire containing questions about gender, age, education, marital status and household size (for results concerning the effects of sociodemographic variables on the dependent variables, see the supplementary materials available at: https://osf.io/8js6f/). Each of the tasks related to measured variables was compulsory. The questionnaire contained two attention check items. Individuals who failed to select correct answers were not included in the analysis.

3.2. Measures

3.2.1. Financial threat

A Financial Threat Scale (FTS, Marjanovic et al., 2015) was used to measure perceived financial threat. It is a 6-item questionnaire measuring how people feel about stability and security of their personal finances. Participants indicated how threatened they feel by their financial situation on a five-point scale (1 = not at all, 5 = a lot). A higher score indicated that participants perceived the situation as more threatening. The McDonald's omega test showed an excellent reliability of this questionnaire (ω = 0.93; SE = 0.01; 95% CI [0.92, 0.94]).

3.2.2. Psychological resources

3.2.2.1. Neuroticism

We used the Neuroticism subscale of Big Five Inventory – 2 adapted into the Slovak language and cultural context (Halama, Kohút, Soto, & John, 2020). Participants had to assess themselves on the attribution of 12 traits indicative of neuroticism/negative emotionality using a five-point scale (1 = strongly disagree, 5 = strongly agree). The scale consists of 3 subscales (anxiety, depression, and emotional volatility), each measured with 4 items. A higher overall score indicated stronger neuroticism. The McDonald's omega test showed a good reliability of this scale (ω = 0.88; SE = 0.01; 95% CI [0.86, 0.90]).

3.2.2.2. Uncertainty intolerance

A 12-item inventory, Intolerance of Uncertainty Scale (IUS), adopted from Carleton et al. (2007) was used to measure attitudes toward uncertainty. Participants assessed their intolerance of uncertainty on a five-point scale (1 = not at all characteristic of me, 5 = entirely characteristic of me). The inventory consists of two subscales measuring prospective anxiety and inhibitory anxiety. A higher overall score was indicative of greater uncertainty intolerance. The McDonald's omega test showed a good reliability of this scale (ω = 0.86; SE = 0.01; 95% CI [0.84, 0.88]).

3.2.3. Behavioural responses

3.2.3.1. Consumption patterns

To measure changes in consumption patterns, we used the Willingness to change financial behaviour scale developed by Fiksenbaum et al. (2017). The scale consists of 15 items aimed at assessing an individual's (1) willingness to take actions that increase incomes, (2) reduce expenses, and (3) decrease debts. Each of the three subscales consists of 5 items. In the context of the COVID-19 pandemic, participants assessed each of the items on a five-point scale (1 = strongly disagree, 5 = strongly agree). The McDonald's omega test showed a good reliability of this scale (ω = 0.89; SE = 0.01; 95% CI [0.87, 0.91]).

3.2.3.2. Coping strategies

We used the Brief cope inventory adapted from Carver (1997) to assess individual coping responses to stressors. The scale was adapted in order to ask which coping strategies participants used while facing their financial hardship posed by the COVID-19 pandemic. The 28-item scale consists of three subscales: maladaptive coping strategies, problem-focused strategies, and emotion-focused strategies. Participants declared how often they used certain forms of coping on a four-item scale (1 = I have not been doing this at all, 4 = I have been doing this a lot). Higher scores indicate greater involvement in a given type of coping behaviour. The McDonald's omega test showed a good reliability of this scale (ω = 0.89; SE = 0.01; 95% CI [0.86, 0.92]).

3.2.4. Financial hardship

3.2.4.1. Acute financial hardship

To measure acute financial hardship caused by the COVID-19 pandemic, we used three indicative questions. First, we asked: “Did your financial situation get negatively affected by the COVID-19 crisis?”. Second: “Did you lose any of your financial income in consequence of COVID-19 crisis?”. Third and last, the government of Slovak Republic established a state-funded support for those who got into severe financial problems. In cases, where their financial situation got significantly worse, people could ask for this state-funded financial support. In this study, we asked participants: “Did you ask for a state-funded financial support because of the current COVID-19 crisis?”

3.2.4.2. Chronic financial hardship

To measure chronic financial hardship, we used three indicative questions. We asked: “Do you have any savings at the moment?”, “Do you have any debts (credit, mortgage, or loan)?”, and “Are you the subject of a debt collection lawsuit?”

4. Results

4.1. Descriptive statistics and relationships between observed variables

Before testing our hypotheses, we report the descriptive statistics and correlation matrix for the measured variables in this study (Table 1 ). Overall, neuroticism showed to be moderately positively correlated with uncertainty intolerance. Likewise, willingness to change financial behaviour showed to be moderately positively correlated with coping strategies. Lastly, financial threat showed weak-to-moderate relationships with all measures from our proposed mediation model.

Table 1.

Descriptive statistics and correlation matrix.

Variable M SD NEUR NEUR1 NEUR2 NEUR3 IUS IUS1 IUS2 FTS WTC WTC1 WTC2 WTC3 BC BC1 BC2
NEUR 2.77 0.73
NEUR1 2.85 0.77 0.91⁎⁎⁎
NEUR2 2.66 0.90 0.89⁎⁎⁎ 0.75⁎⁎⁎
NEUR3 2.80 0.79 0.85⁎⁎⁎ 0.69⁎⁎⁎ 0.60⁎⁎⁎
IUS 3.09 0.67 0.58⁎⁎⁎ 0.51⁎⁎⁎ 0.56⁎⁎⁎ 0.47⁎⁎⁎
IUS1 3.29 0.67 0.47⁎⁎⁎ 0.42⁎⁎⁎ 0.43⁎⁎⁎ 0.39⁎⁎⁎ 0.90⁎⁎⁎
IUS2 2.82 0.86 0.57⁎⁎⁎ 0.48⁎⁎⁎ 0.56⁎⁎⁎ 0.45⁎⁎⁎ 0.88⁎⁎⁎ 0.59⁎⁎⁎
FTS 2.62 0.97 0.29⁎⁎⁎ 0.25⁎⁎⁎ 0.34⁎⁎⁎ 0.16⁎⁎⁎ 0.28⁎⁎⁎ 0.24⁎⁎⁎ 0.27⁎⁎⁎
WTC 2.61 0.79 0.15⁎⁎ 0.11⁎ 0.18⁎⁎⁎ 0.11⁎ 0.19⁎⁎⁎ 0.17⁎⁎⁎ 0.17⁎⁎⁎ 0.38⁎⁎⁎
WTC1 2.56 0.95 0.15⁎⁎ 0.10⁎ 0.16⁎⁎ 0.14⁎⁎ 0.14⁎⁎ 0.14⁎⁎ 0.11⁎ 0.32⁎⁎⁎ 0.89⁎⁎⁎
WTC2 2.87 0.84 0.15⁎⁎ 0.10⁎ 0.19⁎⁎⁎ 0.08 0.20⁎⁎⁎ 0.16⁎⁎ 0.20⁎⁎⁎ 0.38⁎⁎⁎ 0.89⁎⁎⁎ 0.71⁎⁎⁎
WTC3 2.39 0.90 0.11⁎ 0.08 0.14⁎⁎ 0.06 0.15⁎⁎ 0.13⁎⁎ 0.14⁎⁎ 0.32⁎⁎⁎ 0.86⁎⁎⁎ 0.61⁎⁎⁎ 0.64⁎⁎⁎
BC 1.97 0.45 0.24⁎⁎⁎ 0.23⁎⁎⁎ 0.26⁎⁎⁎ 0.14⁎⁎ 0.29⁎⁎⁎ 0.26⁎⁎⁎ 0.25⁎⁎⁎ 0.43⁎⁎⁎ 0.40⁎⁎⁎ 0.35⁎⁎⁎ 0.41⁎⁎⁎ 0.30⁎⁎⁎
BC1 1.48 0.46 0.39⁎⁎⁎ 0.34⁎⁎⁎ 0.42⁎⁎⁎ 0.27⁎⁎⁎ 0.33⁎⁎⁎ 0.24⁎⁎⁎ 0.35⁎⁎⁎ 0.39⁎⁎⁎ 0.25⁎⁎⁎ 0.22⁎⁎⁎ 0.23⁎⁎⁎ 0.21⁎⁎⁎ 0.72⁎⁎⁎
BC2 2.31 0.67 0.21⁎⁎⁎ 0.21⁎⁎⁎ 0.24⁎⁎⁎ 0.10⁎ 0.28⁎⁎⁎ 0.29⁎⁎⁎ 0.20⁎⁎⁎ 0.48⁎⁎⁎ 0.47⁎⁎⁎ 0.40⁎⁎⁎ 0.48⁎⁎⁎ 0.36⁎⁎⁎ 0.87⁎⁎⁎ 0.48⁎⁎⁎
BC3 2.18 0.56 0.01 0.03 <0.01 <.–01 0.11⁎ 0.11⁎ 0.09 0.20⁎⁎⁎ 0.25⁎⁎⁎ 0.22⁎⁎⁎ 0.29⁎⁎⁎ 0.16⁎⁎ 0.82⁎⁎⁎ 0.33⁎⁎⁎ 0.60⁎⁎⁎
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Note. NEUR – Neuroticism scale, NEUR1 – Neuroticism anxiety subscale, NEUR2 – Neuroticism depression subscale, NEUR3 – Neuroticism emotional volatility subscale, IUS – Intolerance of Uncertainty scale, IUS1 – Intolerance of Uncertainty prospecting anxiety subscale, IUS2 – Intolerance of Uncertainty inhibitory anxiety subscale, FTS – Financial Threat Scale, WTC – Willingness to Change Behaviour scale, WTC1 – Willingness to Change Behaviour scale willingness to take actions that increase incomes subscale, WTC2 – Willingness to Change Behaviour scale reduce expenses subscale, WTC3 – Willingness to Change Behaviour scale decrease debts subscale, BC – Brief Cope scale, BC1 – Brief Cope maladaptive coping subscale, BC2 – Brief Cope problem-focused coping subscale, BC3 – Brief Cope emotion-focused coping subscale.

⁎

p < .05.

⁎⁎

p < .01.

⁎⁎⁎

p < .001.

4.2. Testing the mediation model

By testing the model proposed in Fig. 2 , we aimed to investigate the mediation effect of financial threat on the relationship between psychological resources and behavioural responses. According to Baron and Kenny (1986) mediation process, we expected in the first step that psychological resources will significantly predict both financial threat and behavioural responses. In the second step, the prediction of behavioural responses should no longer be significant if a direct path between financial threat and behavioural responses was added. To conduct these analyses, we used a structural equation modelling (SEM) approach using AMOS software. Before analysing relations between constructs, we applied confirmatory factor analysis to investigate measurement models for the proposed constructs.

Fig. 2.

Fig. 2

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Results of the mediation model Note. The model shows standardized regression weights. After adding path “b” between financial threat and behavioural responses, the direct effect of psychological resources on behavioural responses (path c) became insignificant, indicating that financial threat fully mediated the relationship between psychological resources and behavioural responses. NEUR1 – Neuroticism anxiety subscale, NEUR2 – Neuroticism depression subscale, NEUR3 – Neuroticism emotional volatility subscale, IUS1 – Intolerance of Uncertainty prospecting anxiety subscale, IUS2 – Intolerance of Uncertainty inhibitory anxiety subscale, WTC1 – Willingness to Change Behaviour willingness to take actions that increase incomes subscale, WTC2 – Willingness to Change Behaviour reduce expenses subscale, WTC3 – Willingness to Change Behaviour decrease debts subscale, BC1 – Brief Cope problem focused coping subscale, BC2 – Brief Cope emotion focused coping subscale, BC3 – Brief Cope maladaptive coping subscale, this subscale was removed from the model due to its strong covariance with the error term of psychological resources latent factor, *** p < .001.

The results showed that the fit of the measurement models was not satisfactory for conducting our analyses (χ2 = 6.08; df = 50; p < .001; TLI = 0.84; CFI = 0.88; NFI = 0.86; RMSEA = 0.11) for two main reasons. First, the error term for maladaptive coping strategies subscale showed strong covariance with the error term of psychological resources latent factor, indicating that this subscale potentially measures a certain stable disposition serving as a resource when facing financial hardship, rather than specific unstable strategies focused on solving one's financial problems. Second, there was a high covariance in the error terms of problem-focused and emotion-focused coping strategies. Since these two subscales measure the same common construct of coping strategies, this covariance seemed to be more theoretically understandable than the covariance problem of maladaptive coping strategies. Considering these two aspects, we have decided to make two changes in the next model. We omitted maladaptive coping strategies subscale and we added a link between the error terms for problem-focused and emotion-focused coping strategies.

The new model tested showed an acceptable overall fit with the data (χ2 = 3.94; df = 40; p < .001; TLI = 0.92; CFI = 0.94; NFI = 0.92; RMSEA = 0.08), so we have decided to conduct our analyses with the second proposed model. In the first step, psychological resources significantly predicted both financial threat (R 2 = 0.11; β = 0.34; SE = 0.10; p < .001) and behavioural responses (R 2 = 0.05; β = 0.23; SE = 0.09; p < .001), explaining a considerable amount of variance. When a direct path between financial threat and behavioural responses was added in the second step (see path ‘b’ in Fig. 2), the direct prediction of behavioural responses by psychological resources dropped to insignificant level (R 2 = 0.028; β = 0.10; SE = 0.08; p = .21), while the indirect path showed to be significant (see Fig. 2 path “a” and “b”). In addition to the classical mediation process proposed by Baron and Kenny (1986), we adopted a percentile-based bootstrapping estimation approach with 2000 samples (Hayes & Scharkow, 2013). If the relative indirect effect was different from zero according to a percentile-based bias-corrected bootstrap confidence intervals (CIs), we concluded that the mediating effect was present (see Hayes & Preacher, 2014). The indirect effect was significant with CI not containing a zero (β = 0.21; p < .001; SE = 0.04; 95% CI [0.14, 0.30]), suggesting that the financial threat fully mediated the relationship between psychological resources and behavioural responses.

4.3. Moderated mediations for chronic and acute financial hardship

To see whether our indirect mediation model effect remains constant across different levels of chronic and acute financial hardship, we have aimed to explore six moderated mediation models with each financial hardship indicator question separately. Unfortunately, due to the very low number of participants, who answered that they (1) were subjects of a debt collection lawsuit (10 participants), and (2) did ask for a state-funded financial support because of the current COVID-19 crisis (19 participants), we had to omit these two financial hardship indicators in our analyses. As a result, we ended up examining the moderating effect of two indicators of chronic financial hardship and two of acute financial hardship (see Table 2 for these questions). Since all four questions had binomial “yes or no” answers, we used the MyModMed plug-in for AMOS (Gaskin, 2016) that allows examining indirect mediation effects for two research sample subgroups separately (e.g., those who did or did not have any savings) as well as the comparison of estimates of these two indirect effects. If the indirect mediation estimates of groups differed significantly, with 95% confidence interval not containing a zero value, we concluded that a moderated mediation was present. Similarly, as in the mediation analyses, we used a percentile bootstrapping estimation approach with 2000 samples for this method (Hayes & Scharkow, 2013). Table 2 shows standardized regression coefficients for indirect mediation effects of each two respective groups for four specific moderators. The descriptives show that for all examined groups of participants, the indirect mediating effect was significant. Table 3 reporting the comparisons of these indirect effects showed that the mediation model was significantly moderated by the acute financial hardship indicator, regarding the worsening of the financial situation in consequence of the COVID-19 crisis. Specifically, the indirect mediating effect was significantly stronger for those whose financial situation got worse during the COVID-19 crisis compared to those who did not report any negative changes. Other financial hardship indicators did not significantly moderate the mediation model.

Table 2.

Indirect mediation effects for specific research sample subgroups.

Financial hardship indicator Group n β SE
Chronic - Do you have debt (credit, mortgage, or loan)? Yes 156 0.14⁎⁎⁎ 0.05
No 244 0.12⁎⁎⁎ 0.03
Chronic - Do you have any savings at this moment? Yes 272 0.13⁎⁎⁎ 0.03
No 128 0.13⁎⁎⁎ 0.03
Acute - Did your financial situation get negatively affected by the COVID-19 crisis? Yes 188 0.14⁎⁎⁎ 0.04
No 212 0.04⁎⁎ 0.02
Acute - Did you lose any of your financial income in consequence of COVID-19 crisis? Yes 111 0.19⁎⁎⁎ 0.05
No 289 0.09⁎⁎⁎ 0.03
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⁎⁎

p < .01.

⁎⁎⁎

p < .001.

Table 3.

Results of the moderated mediations analyses for specific chronic and acute financial hardship indicators.

Financial hardship indicator Estimations difference 95% CI [LL, UL] p
Chronic - Do you have debt (credit, mortgage, or loan)? 0.03 [−0.14, 0.21] 0.72
Chronic - Do you have any savings at this moment? <0.01 [−0.14, 0.14] 0.98
Acute - Did your financial situation get negatively affected by the COVID-19 crisis? 0.10 [0.004, 0.23] 0.04
Acute - Did you lose any of your financial income in consequence of COVID-19 crisis? 0.08 [−0.06, 0.26] 0.26
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5. Discussion

This study tested a model investigating relations between individual psychological resources, perception of financial threat and behavioural responses to the threat. Specifically, we investigated how neuroticism and uncertainty intolerance affect perceived financial threat and how these feelings of threat change individuals' consumption patterns and use of specific coping strategies to live through the crisis. Additionally, the model distinguished between chronic and acute financial hardship as potential moderators of the effect.

5.1. Financial threat mediates the relationship between psychological resources and behaviour

The main premise of this study was that certain psychological resources make people particularly prone to feelings of financial threat. As we hypothesised, individuals high in neuroticism and uncertainty intolerance perceived the financial threat posed by the COVID-19 pandemic as more severe (H1). These findings are consistent with a recent study by Mann et al. (2020), who found that economic anxiety related to the COVID-19 pandemic increases with neuroticism and the propensity to derive social belongingness from collective assemblies. Also, the present study indicates that uncertainty intolerance is another significant factor that could enhance perception of financial threat. In other words, individuals, who feel less comfortable with uncertain conditions, feel more threatened by the sudden shock caused by the COVID-19 pandemic and its yet unknown economic consequences, regardless of their actual economic situation. These findings contribute to the growing evidence that acute economic shocks can trigger more anxiety among people, who generally do not tolerate ambiguity or uncertainty well (Gasiorowska, 2014). Following Marjanovic et al. (2013), thus, we conclude that feelings of financial threat are not solely about one's actual financial situation but about an individual's predisposition to feel threatened.

Next, we investigated whether feelings of financial threat lead to changes in consumption patterns and what specific coping strategies individuals activated to face the financial stress. Increased financial threat elicited stronger behavioural responses (H2). Specifically, heightened perception of financial threat led to intentions to increase income, decrease expenses, and manage debts more optimally. In line with Fiksenbaum et al. (2017), the present study shows that more threatened individuals were willing to change their consumption patterns. Particularly, the individuals' willingness to change financial behaviour was more pronounced in respect to expense reduction. Our results also suggest that individuals are inclined to use mostly adaptive problem-focused coping strategies instead of maladaptive strategies (e.g., drug or alcohol abuse) or emotion-focused strategies. The findings indicate that, so far, the unpredictable and uncontrolled economic consequences did not inhibit people's sense of control over their own financial situation and steer them toward adoption of individually adaptive forms of behaviour. However, such tendency may be very unstable and our findings could have been affected by the course of the pandemic in Slovakia. We conducted the study during the first wave of the COVID-19 pandemic, where Slovakia had the mildest health-related consequences among all European countries. Even in such relatively mild conditions, we found a moderate relationship between using maladaptive coping strategies and neuroticism, uncertainty intolerance, as well as financial threat. With the more severe course of the pandemic, individuals may feel more threatened, which may increase the adoption of maladaptive consumption and coping strategies (Holmgren et al., 2019; Marjanovic et al., 2015).

Finally, the mediation analysis supports the view that the relation between psychological resources and behavioural responses is not straightforward and can be explained by the perception of financial threat. It was showed that, the more neurotic and uncertainty intolerant individuals perceived their financial situation as threatening the more they were willing to adapt their consumption patterns and apply specific coping strategies. In other words, the perception of financial threat serves as a trigger of behavioural changes among neurotic and uncertainty intolerant individuals. These findings corroborate our hypothesis that the perception of financial threat mediates the relation between psychological resources and behavioural responses (H3). The findings are consistent with studies by Marjanovic et al., 2013, Marjanovic et al., 2015, who found that subjective perceptions of threat predict behavioural outcomes better than objective indicators of one's financial situation. Similarly, Fiksenbaum et al. (2017) showed that people who perceived themselves as financially vulnerable were more prone to suicidal thoughts and suffered from greater psychological distress. Finally, Greenglass and Mara (2012) observed that individuals with certain psychological resources (self-efficacy) perceived their financial situation as less threatening and consequently experienced less psychological distress. Our findings support the view that behavioural responses to financial threat are grounded in subjective evaluation of the situation and depend on psychological resources more than on individual's objective financial circumstances.

5.2. Moderating role of acute and chronic financial hardship

Finally, the paper extends the current knowledge by distinguishing between the moderating effect of acute and chronic economic hardship. Our study shows that the mediation effect of financial threat on the relationship between psychological resources and behavioural responses was stronger for individuals, who were forced to ask for state-funded financial support. In contrast, experiencing chronic financial hardship (including the absence of savings and having debts) did not matter for the mediation effect of financial threat. This suggests that acute changes in one's financial situation caused by the COVID-19 pandemic have greater potential to induce financial threat and, thus, are also more responsible for the changes in one's financial behaviour and adaptation of specific coping strategies. Perhaps this is the most important finding of the present study indicating that sudden economic turbulences trigger different coping strategies inclining people to respond to immediate threats while psychologically accommodating their long-term financial situation. In other words, during sudden negative economic shock, like the one brought by the COVID-19 pandemic, people may start to overlook the chronic financial hardship they experienced before the shock. Instead, they may focus more on the acute changes in their financial situation and perceive them as far more damaging to one's sense of financial security. A possible explanation of this effect is that during turbulent times, it is particularly difficult to predict how the situation will change and adjust behaviour accordingly. Our findings are consistent with the study by Marjanovic et al. (2018), who observed that recent experience of financial hardship together with uncertainty concerning the future development of economic circumstances had the greatest potential to cause financial anxiety.

5.3. Study limitations and implications for future research

Despite our best efforts, the study has limitations that are worth mentioning. First, we were not able to include maladaptive coping strategies in our model because of the strong covariance of its error term with the error term of psychological resources latent factor. A possible explanation of this covariance is that the Brief cope inventory (Carver, 1997) was originally constructed to measure relatively stable coping tendencies, rather than investigating which specific strategies individuals use in adaptation to certain stressful events. Before using this instrument, we have made significant changes in the instructions and items just to be sure that participants would report what specific strategies they have used to face negative consequences of the COVID-19 pandemic, and not strategies that they generally use. Despite this effort, it seems that this instrument—especially maladaptive coping strategies—still captured the relatively stable tendency: those who used maladaptive coping strategies to face negative financial consequences of COVID-19 pandemic, like using drugs or alcohol, tend to use these strategies in general. In other words, maladaptive strategies may serve them as a psychological resource for coping with various stressors, not only with the pandemic.

Second, we used only a limited number of acute and chronic financial hardship indicators. Even with the aim to use six objective indicators, we were able to use only four of them because of the limited number of participants, who reported having been the subject of a debt collection lawsuit or were forced to ask for a state-funded financial support. Future research may focus on investigating other indicators including postponing clothing purchases, or changing food shopping habits to save money. In addition to more economic indicators, like having debt or savings, such consumption-focused indicators could help to provide broader image of one's actual financial hardship.

Despite the limitations, however, the present study suggests that the link between individual psychological resources, threat perception and behavioural responses is robust across various economically turbulent situations. Consequently, by extending the model developed by Marjanovic et al., 2013, Marjanovic et al., 2015 to investigate consequences of the Great Recession, our findings allow to expect similar patterns to be observed during disruptive events, other than the COVID-19 pandemic, that have apparent and acute financial consequences. A future research is needed to investigate this expectation.

6. Conclusions

The COVID-19 pandemic dramatically changed lives of billions of people around the world. Containment measures adopted to slow down the virus spread had adverse effects on individuals' economic activities and raised questions about their capacity to maintain financial security. A positive message from the present study is that threatened individuals are willing to optimise behaviour through reducing expenses, saving more and adopt mostly problem-focused coping strategies. However, with the worsening epidemic situation, attitudes may change and individuals may become less resilient both psychologically and economically. Consequently, it is possible that the share of maladaptive forms of behaviour may increase as the situation worsens, which may have negative consequences both at individual and societal level (Marjanovic et al., 2015). Apart from pointing to individual maladaptive behaviour, past studies send an alarm that economic threat may bring about various socially undesired behaviours and attitudes, like increased in-group bias and out-group hostility, ethnic prejudices, xenophobia and antisemitism (Becker et al., 2011; Dubey et al., 2020; Fritsche & Jugert, 2017). To prevent socially harmful behaviour, we highlight the importance of providing individuals with reliable and comprehensible information about economic opportunities and supportive measures adopted at the institutional level. All measures should be communicated in a way that would have potential to reduce uncertainty and mitigate adverse effects of economic shock (Barrafrem et al., 2020). Decision-makers at the institutional level should also keep in mind that cutting consumption may also have a negative effect on the pace of recovery of the economy on a macro scale. Thus, our findings suggest that some institutional actions may be necessary to sustain optimal levels of individual demand and consumption in order to secure that cautious individual decisions will not interfere with the economic recovery after the crisis.

CRediT authorship contribution statement

Magdalena Adamus: Conceptualization, Methodology, Resources, Investigation, Writing – original draft, Writing – review & editing. Matúš Grežo: Conceptualization, Methodology, Formal analysis, Writing – original draft, Writing – review & editing.

Acknowledgments

The research was funded by the MSCA-IF grant Gender and risk-taking: the role of social and situational antecedents on performance in risk-related tasks (supported from the project MSCAfellow3@MUNI, CZ.02.2.69/0.0/ 0.0/19_074/0012727)1 and the VEGA grant: Cognitive and personality predictors of trust building (VEGA no. 2/0035/20)2.

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