Need depriving effects of financial insecurity: Implications for well-being and financial behaviors

Netta Weinstein, Dan N. Stone

Research output: Contribution to journalArticlepeer-review

31 Scopus citations

Abstract

Evidence suggests that experiencing financial insecurity lowers well-being and increases problematic financial behaviors. The present article employs a self-determination theory (SDT; R. M. Ryan & Deci, 2000a) perspective to understand the mechanisms by which experiencing financial insecurity contributes to these detrimental outcomes. Informed by SDT, we expected that the basic psychological needs for autonomy, competence, and relatedness would drive these effects. Studies were concerned with individuals' general experiences of financial insecurity (using community samples; Studies 1 and 2), and employed manipulations involving self-reflection (Study 3) and hypothetical scenarios (Study 4). Findings demonstrated that financially insecure conditions undermined basic psychological needs and lowered well-being (measured in terms of self-esteem, depression, and anxiety). In addition, lower satisfaction of basic psychological needs linked financial insecurity to a greater likelihood of engaging in financial cheating (Studies 2 and 3) and risky financial decisions (Study 4). Importantly, this pattern of effects remained in evidence across socioeconomically diverse samples and income levels. We discuss implications for future interventions to improve the wellness of individuals in financially insecure circumstances.

Original languageEnglish
Pages (from-to)1503-1520
Number of pages18
JournalJournal of Experimental Psychology: General
Volume147
Issue number10
DOIs
StatePublished - Oct 2018

Bibliographical note

Publisher Copyright:
© 2018 American Psychological Association.

Keywords

  • Financial behaviors
  • Financial insecurity
  • Psychological needs
  • Self-determination theory
  • Well-being

ASJC Scopus subject areas

  • Experimental and Cognitive Psychology
  • General Psychology
  • Developmental Neuroscience

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