Research Team Studies COVID-19-Related Financial Shocks for Private Households

Besides severe social and economic cutbacks, the COVID-19 pandemic is putting many people in financial difficulties. This applies above all to people on low incomes or to occupational groups that are particularly affected by the pandemic. An interdisciplinary team of researchers from the University of Mannheim, ZEW Mannheim and the Leibniz Institute for Resilience Research in Mainz will now investigate how people in Germany deal with coronavirus-related financial shocks. The project partners contribute their perspectives of economic and business education (Professor Carmela Aprea, University of Mannheim), household economics (Professor Tabea Bucher-Koenen, ZEW Mannheim) and psychological resilience research (Professor Klaus Lieb and Dr. Donya Gilan, Leibniz Institute for Resilience Research) to the research.

“We are particularly interested in how people make decisions while facing high uncertainty and complexity after being hit by a financial shock. This allows us to determine which social and educational policy measures can be used to provide effective and sustainable support for the households affected,” explains Professor Carmela Aprea from the University of Mannheim.

“Research is already being conducted on the general psychological and social consequences of the COVID-19 pandemic. However, there is very little research data on the financial challenges and their medium to long-term consequences for households and the economy as a whole,” says Professor Tabea Bucher-Koenen, head of the Research Department “International Finance and Financial Management” at ZEW Mannheim and chairholder at the University of Mannheim.

“A key task for us is to develop individual and structural recommendations for action in order to be able to provide citizens with targeted support in such situations,” explains Professor Klaus Lieb, scientific managing director at the Leibniz Institute for Resilience Research. “This is because those affected are exposed to an increased risk of poverty, which can push them to the margins of society.” Dr. Donya Gilan from the Leibniz Institute for Resilience Research adds: “Mental health depends heavily on a person’s psychosocial situation. It is above all financial hardships that cause people to suffer from mental illnesses such as anxiety disorders, depression or even addictions, as psychological strategies for coping with such situations are often lacking. As a result, those affected often suffer from permanent stress and social stigmatization.”

The research project is funded by the Federal Ministry of Labour and Social Affairs (BMAS) from 1 September 2020 to 31 August 2021. The Ministry has included it in the funding network Interdisciplinary Social Policy Research (FIS) as one of twelve projects with a focus on COVID-19. The projects were selected on the basis of their ability to provide the scientific evidence needed to cope with the coronavirus pandemic.