The Economic Impact of Personal Financial Stress.
A new working paper by economists looks at what stress can do to a household's financial situation and its implications for the economy. The majority of Americans are already stressed out, and the financial shock of a recession will likely put many more people under stress, and increase the stress levels of those who are already suffering. Financial stress can mean lower earnings, an impact on the labor supply, and impaired productivity. Policies such as default choices that encourage saving and the promotion of financial literacy could be powerful antidotes to the negative consequences of financial stress.