The causes and consequences of household financial strain: A systematic review

The 2007-08 financial crisis caused a deep global recession with lasting effects on economies worldwide. Millions of households in developed countries currently report having difficulty making ends meet. In this paper, we systematically review finance and economics research on household financial strain to identify research gaps. We find that economists could make a valuable contribution to this literature. More analysis involving developed economic theory would provide clarity to partial and sometimes contradictory results. Research could explore aspects of the dynamics of financial strain; heterogeneity in coping strategies and the association with health outcomes. A few themes suggested in other literatures could also be examined such as the relative importance of chronic and acute stress as well as the roles of habituation and sensitization for welfare outcomes.