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Abstract

Poverty is associated with mental health outcomes such as anxiety and depression, as well as other psychological variables such as steeper time discounting and greater risk aversion. However, less is known about whether short-term changes in financial circumstances are coupled to immediate psychological responses. We studied panels of adults in France (n = 232) and the UK (n = 240), who completed financial and psychological surveys every month for a year at a time of rapid change in the cost of living (September 2022-August 2023). We found the expected overall socioeconomic gradients in anxiety, depression and time discounting. In addition, monthly fluctuations in financial situation were associated with fluctuations in depression, anxiety and risk preference. Increases in essential costs, considered separately from fluctuations in income, had an immediate impact on depression. Social support, the instrumental and emotional assistance derivable from one’s social network, buffered the effects of short-term financial fluctuations on depression and time discounting, but did not mitigate the overall gradients. We conclude that declines in income or increases in the cost of living have immediate and measurable mental health impacts, which must be borne in mind in the formulation and evaluation of public policy.