The Sharp Spikes of Poverty: Financial Scarcity Is Related to Higher Levels of Distress Intensity in Daily Life

Abstract

Although income is an important predictor of life satisfaction, the precise forces that drive this relationship remain unclear. We propose that financial resources afford individuals a path to reducing the distressing impact of everyday hassles, thereby increasing one’s life satisfaction. More specifically, we hypothesize that financial scarcity is associated with greater distress intensity in everyday life. Furthermore, we propose that lower perceived control helps explain why financial scarcity predicts higher distress intensity and lower life satisfaction. We provide evidence for these hypotheses in a 30-day daily diary study (522 participants, 13,733 observations). A second study (N = 376) further suggests that, although everyone relies on social support to ease stress, financial scarcity shrinks the sense one can use economic resources to reduce the adverse impact of daily hassles. Although money may not necessarily buy happiness, it reduces the intensity of stressors experienced in daily life—and thereby increases life satisfaction.