The Power of Love: Emotional Support and Financial Hardship

Abstract

Using microdata from two complementary U.S. household surveys, I document that individuals who lack emotional support from family and friends are more likely to experience financial hardship. This pattern is substantially stronger for women as well as for those prone to anxiety and depression. Further evidence suggests a belief-based channel through which emotional support improves financial preparedness for potential adverse shocks. Overall, these findings underscore the importance of the psychological dimension of social networks in shaping household financial outcomes.

Keywords: emotional support, financial hardship, social networks

JEL Classification: D91, G4, G5