Article Abstract

Online ISSN: 1099-176X    Print ISSN: 1091-4358
The Journal of Mental Health Policy and Economics
Volume 25, Issue 4, 2022. Pages: 133-142
Published Online: 1 December 2022

Copyright © 2022 ICMPE.

Does Stimulus Check Payment Improve People's Mental Health in the COVID-19 Pandemic? Evidence from U.S. Household Pulse Survey

Lanlan Chu,¹* Lufei Teng²

¹Ph.D., Assistant Professor of Economics, St. Catherine University, St. Paul. MN, USA
²Ph.D., Assistant Professor of Economics and Finance, Muhlenberg College, Allentown, PA, USA

Background: As the COVID-19 pandemic quickly spread worldwide, mental health deterioration was found to be closely associated with not only the contagious disease itself but also the financial struggles caused by job or income loss during this difficult time.

Objective: This study investigates how stimulus check payments are associated with the probable anxiety and depression faced by U.S. individuals during the COVID-19 pandemic.

Methods: Using data from Phase 3.1 of the Household Pulse Survey between April 14 and July 5, 2021, this research applies a probit model to estimate the marginal effects of stimulus check payments on people's mental health in the United States during the pandemic period. After checking the robustness of the main results, this study explores the heterogeneities in the association between stimulus payments and mental health by gender, race, income, and work status. We further evaluated how the spending of stimulus checks affected people's mental health in terms of probable anxiety and depression.

Results: This analysis finds a significantly positive association between mental health and stimulus check availability. For people who have received stimulus checks, the likelihood of probable anxiety and depression is significantly lower than those who have not. Furthermore, a COVID-19 stimulus payment has a more significant positive impact among males, white people, and those who have low income or lost jobs. Regarding the spending of stimulus payments, we found that paying off debt could significantly reduce the possibility of respondents having probable anxiety and depression.

Discussion: These results can provide important insights into understanding the effectiveness of stimulus payments initiated during the health and economic crisis. The study focuses on the one-time stimulus checks, which are not the only income compensation programs for individuals who have experienced income or job loss during the pandemic. We suggested future studies could include sustainable social welfare programs to analyze their effects on mental health during and after the crisis.

Policy Implications: The findings justify the necessity of implementing stimulus programs, particularly for financially vulnerable groups who have urgent debt, low income, or job loss. Policymakers should carefully identify populations in urgent need during a crisis, aiming to efficiently implement direct payment programs.