Stress and Financial Decision-making

Case Study


The average American holds about 38,000 USD in debt, excluding their home mortgage. For the majority of the population sustainable borrowing and making consistent repayments is a major source of personal stress. High levels of stress can impact the distribution of cognitive resources. Financial decisions are some of the most stressful, complex, and impactful decisions individuals make, and thus lent itself to an area of inquiry for potential behavioural interventions.


A top-10 US bank approached us to perform research and develop interventions that can improve the quality of financial decision-making for Americans. We identified stress as a particularly important topic that has thus far been unaddressed and decided to ask the following questions:

  1. What are the negative psychological consequences of stress on financial decision making?
  2. How do individual characteristics such as age, gender, education level, and household income mediate stress levels and responses to behavioural interventions?
  3. What simple and actionable interventions can have significant positive effects on financial behaviours and attitudes?


Although we cannot yet reveal the results, we did find that:

  • Stress is a strong predictor of poor financial decision making and attitudes
  • A quick 30 second exercise allowed us to create disarm the effects of stress on financial decision making, improving certain financial behaviours and attitudes, even without addressing stress levels directly.