The Sharp Spikes of Poverty: Financial Scarcity is Linked to Higher Distress Intensity
Despite widespread consensus that income is an important predictor of life satisfaction, the precise affective forces that drive this relationship remain unclear. We propose that income is positively associated with life satisfaction because financial resources reduce the negative impact that everyday difficulties have on individuals; these hassles rebound off the rich but pierce the poor. Specifically, we hypothesize that financial scarcity is associated with greater distress intensity but not a higher frequency of distressing episodes. Furthermore, we propose that lower perceived control helps explain why financial scarcity predicts higher distress intensity, and underlies the relationship between financial scarcity and life satisfaction. We provide evidence for these hypotheses through a daily diary study with 522 participants and 13,733 observations. Our theory and results combine to suggest that financial resources appear to serve an important function in promoting life satisfaction by reducing the intensity of distressing episodes when they arise.