Effects of financial insecurity on social interactions

Little is known about the effects of financial insecurity on social interactions despite consistently observed income effects on social capital and a growing recognition of the potential importance of income volatility in affecting hardships, distress, and other aspects of well-being. We use data on women participating in a longitudinal study in the U.S. to investigate the effects of financial insecurity measured along two dimensions (safety nets and hardships) on two types of social interactions (participating in community organizations and having close friends). In auxiliary analyses we explore the potential mediating effects of mental health. We find that safety nets in the form of bank accounts, credit cards, and ability to borrow money increase both participation in organizations and friendships, whereas material hardships decrease friendships but increase participation in organizations. We find no evidence that mental health, as we have measured it, mediates the observed effects of financial insecurity on social interactions, although it has strong and negative independent associations with having close friends.