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Financial Fragility during the COVID-19 Pandemic

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  • Robert L. Clark
  • Annamaria Lusardi
  • Olivia S. Mitchell

Abstract

Early in the COVID-19 pandemic, much of the US economy was closed to limit the virus's spread, and several emergency interventions were implemented. Our analysis of older (45–75) respondents fielded in April–May of 2020 indicates that about 1 in 5 respondents was financially fragile and would have difficulty facing a midsize emergency expense. Some subgroups were at particular risk of facing financial difficulties, especially younger respondents, those with larger families, Hispanics, and those with low income. Moreover, the more financially literate were better able to handle such shocks, indicating that knowledge can provide some additional protection during a pandemic.

Suggested Citation

  • Robert L. Clark & Annamaria Lusardi & Olivia S. Mitchell, 2021. "Financial Fragility during the COVID-19 Pandemic," AEA Papers and Proceedings, American Economic Association, vol. 111, pages 292-296, May.
  • Handle: RePEc:aea:apandp:v:111:y:2021:p:292-96
    DOI: 10.1257/pandp.20211000
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    1. Robert W. Fairlie & Kenneth Couch & Huanan Xu, 2020. "The Impacts of COVID-19 on Minority Unemployment: First Evidence from April 2020 CPS Microdata," NBER Working Papers 27246, National Bureau of Economic Research, Inc.
    2. Annamaria Lusardi & Olivia S. Mitchell & Noemi Oggero, 2020. "Debt and Financial Vulnerability on the Verge of Retirement," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 52(5), pages 1005-1034, August.
    3. Annamaria Lusardi & Olivia S. Mitchell, 2014. "The Economic Importance of Financial Literacy: Theory and Evidence," Journal of Economic Literature, American Economic Association, vol. 52(1), pages 5-44, March.
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    Cited by:

    1. Cynthia L. Harter & John F. R. Harter, 2022. "The Link Between Adverse Childhood Experiences and Financial Security in Adulthood," Journal of Family and Economic Issues, Springer, vol. 43(4), pages 832-842, December.
    2. Gopi Shah Goda & Emilie Jackson & Lauren Hersch Nicholas & Sarah See Stith, 2023. "The impact of Covid-19 on older workers’ employment and Social Security spillovers," Journal of Population Economics, Springer;European Society for Population Economics, vol. 36(2), pages 813-846, April.
    3. Belmonte, A & Pickard, H, 2022. "Safe at Last? LATE Effects of a Mass Immunization Campaign on Households’ Economic Insecurity," CAGE Online Working Paper Series 604, Competitive Advantage in the Global Economy (CAGE).
    4. Gallo, Giovanni & Sconti, Alessia, 2023. "How much financial literacy matters? A simulation of potential influences on inequality levels," GLO Discussion Paper Series 1266, Global Labor Organization (GLO).
    5. Wang-Ly, Nathan & Newell, Ben R., 2022. "Allowing early access to retirement savings: Lessons from Australia," Economic Analysis and Policy, Elsevier, vol. 75(C), pages 716-733.
    6. Dmitriy Sergeyev & Chen Lian & Yuriy Gorodnichenko, 2023. "The Economics of Financial Stress," NBER Working Papers 31285, National Bureau of Economic Research, Inc.
    7. Andrej Cupak & Martin Cesnak & Jan Klacso & Martin Suster, 2021. "Fates of indebted households during the Corona crisis: Survey results from Slovakia," Working and Discussion Papers OP 2/2021, Research Department, National Bank of Slovakia.
    8. Giovanni Gallo & Alessia sconti, 2023. "Could financial education be a universal social policy? A simulation of potential influences on inequality levels," Center for the Analysis of Public Policies (CAPP) 0182, Universita di Modena e Reggio Emilia, Dipartimento di Economia "Marco Biagi".
    9. Niculaescu, Corina E. & Sangiorgi, Ivan & Bell, Adrian R., 2023. "Does personal experience with COVID-19 impact investment decisions? Evidence from a survey of US retail investors," International Review of Financial Analysis, Elsevier, vol. 88(C).
    10. Kleimeier, Stefanie & Hoffmann, Arvid O.I. & Broihanne, Marie-Hélène & Plotkina, Daria & Göritz, Anja S., 2023. "Determinants of individuals’ objective and subjective financial fragility during the COVID-19 pandemic," Journal of Banking & Finance, Elsevier, vol. 153(C).
    11. Elisa Bocchialini & Beatrice Ronchini & Francesca Torti, 2023. "Predicting Students’ Financial Knowledge from Attitude towards Finance," International Journal of Business and Management, Canadian Center of Science and Education, vol. 17(6), pages 1-13, February.
    12. Sconti, Alessia, 2022. "Digital vs. in-person financial education: What works best for Generation Z?," Journal of Economic Behavior & Organization, Elsevier, vol. 194(C), pages 300-318.
    13. Bacchiocchi, Andrea & Bischi, Gian Italo & Giombini, Germana, 2022. "Non-performing loans, expectations and banking stability: A dynamic model," Chaos, Solitons & Fractals, Elsevier, vol. 157(C).
    14. Soetevent, Adriaan R., 2022. "Short run reference points and long run performance. (No) Evidence from running data," Journal of Economic Psychology, Elsevier, vol. 89(C).
    15. García, J. & Gómez, Y. & Vila, J., 2022. "Financial overconfidence, promotion of financial advice, and aging," Journal of Business Research, Elsevier, vol. 145(C), pages 325-333.
    16. David Aristei & Manuela Gallo, 2021. "Financial Knowledge, Confidence, and Sustainable Financial Behavior," Sustainability, MDPI, vol. 13(19), pages 1-21, September.
    17. Pașa Adina Teodora & Gherghina Elena Mădălina & Picatoste Xose, 2022. "Financial Literacy and Economic Growth: How Eastern Europe is Doing?," Economics - The Open-Access, Open-Assessment Journal, De Gruyter, vol. 16(1), pages 27-42, January.

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    More about this item

    JEL classification:

    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • G51 - Financial Economics - - Household Finance - - - Household Savings, Borrowing, Debt, and Wealth

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