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Journal of Economic Psychology 36 (2013) 110

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Journal of Economic Psychology


journal homepage: www.elsevier.com/locate/joep

Psychometric evaluation of the Financial Threat Scale (FTS)


in the context of the great recession
Zdravko Marjanovic a,, Esther R. Greenglass b, Lisa Fiksenbaum b, Chris M. Bell c
a

Memorial University of Newfoundland, Grenfell Campus, Division of Social Science,Canada


York University, Department of Psychology, Canada
c
York University, Schulich School of Business, Canada
b

a r t i c l e

i n f o

Article history:
Received 12 April 2012
Received in revised form 21 January 2013
Accepted 11 February 2013
Available online 19 February 2013
JEL classication:
Z10
PsycINFO classication:
2226
2223
3040
3120

a b s t r a c t
In the current economic downturn, people are fearful, uncertain, and preoccupied about how
the recession affects them, their loved ones, and their collective futures. In short, they feel
threatened by the stability and security of their personal nances. This study examined
the psychometric properties of the Financial Threat Scale (FTS), a 5-item scale which was
designed to measure these feelings. Data were collected in Canada at the height of the recession as part of a larger international investigation on the economic downturn and psychological health. Results showed the FTS is unidimensional and highly reliable. The FTS validity
was supported by showing its relations with (1) psychological health outcomes, nancial situation measures, and individual differences measures, all in the expected directions. The FTS
also showed incremental validity by accounting for variance in psychological health outcomes above-and-beyond that of either the nancial situation measures or individual differences measures. The theoretical and practical implications of the FTS are discussed.
2013 Elsevier B.V. All rights reserved.

Keywords:
Economic crisis
Perceived threat
Uncertainty
Individual differences
Psychological health

1. Introduction
The current economic downturn, popularly dubbed the Great Recession, has had an immense negative impact on economies all over the world. At the level of the individual, personal nancial situations have worsened for some to the point of
exasperation (Ayers et al., 2012; Barr, Taylor-Robinson, Scott-Samuel, McKee, & Stuckler, 2012; Richman et al., 2012; Tefft,
2011), while most others have experienced at least some negative effects, such as increased job insecurity, increased debt
levels, and investment losses (Deaton, 2012). According to a study by Sperling, Bleich, and Reulbach (2008), the publics initial reaction to the crisis was characterized by fear, anxiety, and a generalized sense of panic. Several years into the crisis, the
mood of disparate populations about the health and trajectory of their economies remains largely negative (Erlanger, 2010;
Hill, 2012; Marlar, 2012).
Recent studies across the social sciences have shown that the deterioration of personal nances, which is itself exacerbated by economic downturns, is a major source psychological turmoil. For example, recent cross-cultural research has
Corresponding author. Address: Memorial University of Newfoundland, Grenfell Campus, 1 University Drive, Corner Brook, NL, Canada A2H 6P9.
E-mail address: marjanxrk@gmail.com (Z. Marjanovic).
0167-4870/$ - see front matter 2013 Elsevier B.V. All rights reserved.
http://dx.doi.org/10.1016/j.joep.2013.02.005

Z. Marjanovic et al. / Journal of Economic Psychology 36 (2013) 110

shown strong associations between gross domestic product (GDP) per capita and well-being indexes (Diener, Ng, Harter, &
Arora, 2010; Stevenson & Wolfers, 2008). The worse, on average, a countrys citizenry does nancially, the less they report
subjective well-being and satisfaction with life. In fact, studies have linked personal nancial problems as a contributing factor to a wide array of negative psychosocial outcomes, such as psychological distress and mental illness (Brown, Taylor, &
Wheatley Price, 2005; Fitch, Hamilton, Bassett, & Davey, 2011; Jenkins et al., 2008; Roberts, Golding, Towell, & Weinreb,
1999), depression (Mirowsky & Ross, 2001), suicide and suicide ideation (Yip, Yang, Watson, Ip, & Law, 2007), dissatisfaction
with life, stress, and dysfunctional impulsivity (Bechtel, 2012; Norvilitis, Szablicki, & Wilson, 2003), low birth weight (Binascca, Ellis, Martin, & Petitti, 1987), heart-disease mortality (Brenner, 1971), and divorce and marital discord (Gigy & Kelly,
1992).
A potential psychological concept that can bridge the gap between nancial health and psychological well-being is stress
appraisal. According to the transactional model of stress, stressors are rst assessed as to their signicance or threat level
(Lazarus & Folkman, 1984). Largely, this primary appraisal process involves estimating the harm a stressor has already
had or is likely to cause in the future. In general, the greater the harm estimated, the greater the stressor is perceived as being
threatening. After levels of a stressors threat have been appraised, a secondary appraisal process ensues that evaluates potential approaches one has for coping with threats. Perceived inability to cope leads to maladaptive psychosocial outcomes,
such as emotional exhaustion, cynicism, and perceived loss of control (i.e., burnout; Greenglass, Fiksenbaum, & Burke, 1996;
Maslach, 2001).
It follows that, due to the importance of personal nances for maintaining standards of living, any potential for disruption
or destabilization of personal nances is likely to be taken very seriously by most people. In times of economic crisis, in particular, perceived nancial threat would likely be higher than normal. This is because the probability of suffering nancial
setbacks is increased due to deterioration of the economic environment. In addition, reminders of the potential for nancial
setbacks are more salient in media-reported indicators, such as rising unemployment rates and lowering quality of life standards (Canadian Index of Wellbeing, 2012; Grant, 2012), and through contact with individuals who have themselves suffered
a negative impact. In an analysis of Gallup poll data from 2008 and 2009, researchers examined the relation between yearly
personal income and well-being indexes in more than 450,000 Americans (Kahneman & Deaton, 2010). The correlation between income and well-being was positive and strong but tended to plateau after income reached about $75,000 US. Tellingly, their ndings also showed that having low income was signicantly correlated with suffering a myriad of negative
psychophysiological outcomes, such as emotional pain and ill health. Thus, although the old adage may be still be true
money does not buy happinessit may be exceedingly difcult to be happy without it.
In light of the these collective ndings we argue that as individuals perceive that their personal nancial situations have
been eroded and destabilized by an economic downturn, they will increasingly experience high levels of perceived nancial
threata mixture of fear, uncertainty, and cognitive preoccupation about the security and stability of their personal nances
(Hypothesis 1). Similar to the experience of other stressors, the more acute the feeling of nancial threat, the greater it will
be reected in maladaptive psychophysiological health outcomes, such as psychological distress, depression, anxiety, and
mood disturbance (Hypothesis 2).

1.1. Individual differences and nancial threat


The above rationale raises another question. Given the same nancial situation and economic environment, do all individuals experience nancial threat equally or are some people more prone to it than others? Based on previous research on
personality and psychological health, several trait characteristics are likely to be associated with both nancial threat and
maladaptive outcomes. For example, individuals who tend to worry have higher levels of anxiety and depression than
non-worriers (Brown, Antony, & Barlow, 1992). Worry can be dened as negative thoughts and affect related to perceived
inability/lack of control to achieve personal goals (see Kubzansky et al., 1997). Worriers are also more intolerant of uncertainty (Freeston, Rhaume, Letarte, Dugas, & Ladouceur, 1994), remember threat-related words in memory tasks better than
neutral words (Friedman, Thayer, & Borkovec, 2000), and have higher levels of heart-disease risk (Kubzansky et al., 1997).
Given this, we expect to nd that worry and perceived nancial threat are positively related variables. Individuals who tend
to worry are more likely to perceive instability and insecurity in their personal nancial situations than individuals who tend
to worry less.
Another likely correlate of nancial threat is ruminationthe tendency to have frequent, unsolicited negative thoughts
about experiences or themes, and dwell on their obstruction of personal goals (Scott & Mclntosh, 1996). Trait rumination
has been empirically connected to a wide array of maladaptive outcomes, such as depression, anxiety (Harrington & Blankenship, 2002), and post-traumatic stress disorder (Clohessy & Ehlers, 1999), and is positively related to trait worry (Scott
& Mclntosh, 1996). In surveys of nurses who worked with patients during the SARS crisis, the nurses who spent the most
time in direct contact with SARS patients and spent time in quarantine as a result of this contact were the most likely to
report feelings of threat and rumination about vulnerability to infection (Bai et al., 2004; Maunder et al., 2003). In turn, these
nurses also experienced high levels of negative psychosocial outcomes like emotional exhaustion, state anger, and avoidance
behaviors (Fiksenbaum, Marjanovic, Greenglass, & Coffey, 2006; Marjanovic, Greenglass, & Coffey, 2007). We glean from
these studies that perceived threat and rumination seem to be intimately connected and both appear related to negative psychosocial outcomes that are common to exposure to acute levels of stress.

Z. Marjanovic et al. / Journal of Economic Psychology 36 (2013) 110

Finally, generalized self-efcacya persons condence that he or she can cope with and manage stressful situations
effectively (Schwarzer & Jerusalem, 1995)is likely negatively related to nancial threat. Previous research shows that
self-efcacy relates to adaptive outcomes, such as academic achievement (Wood & Locke, 1987) and productivity (Taylor,
Locke, Lee, & Gist, 1984), and maladaptive outcomes, such as depression (Holahan & Holahan, 1987), anxiety, and avoidance
behavior (see Bandura, 1988). In one study, self-efcacy predicted risk taking, which in turn was negatively related to perceived threat (Krueger & Dickson, 1993). These studies suggest that, irrespective of situational conditions, an individual who
has condence in his or her ability to cope with stressful situations will not be as prone to experience nancial threat as
someone with lower levels of generalized self-efcacy.
In sum, we expect to nd that nancial threat is positively related to trait levels of worry and rumination, and negatively
related to generalized self-efcacy (Hypothesis 3). We further propose that because nancial threat seems to be deeply inuenced by both situational economic conditions and personality variables, nancial threat should account for additional variance in psychological health outcomes not accounted for by the situational variables (Hypothesis 4). Similarly, when
compared against personality trait variables, nancial threat should also account for additional unique variance in health
outcomes (Hypothesis 5).
1.2. Research overview
The aim of the present study was to evaluate the newly developed Financial Threat Scale (FTS) in the context of the greatest
economic recession since the Great Depression of the 1930s. In order to do this, we embedded the FTS in a questionnaire about
the economic downturn and psychological health, and administered the questionnaire to 480 undergraduate students at a
large Canadian university. These data were collected between 2009 and 2010, at the height of the economic downturn. From
this large sample, a subset of participants (n = 150) was randomly selected to rst evaluate the underlying component structure of the FTS, after which the larger subset (n = 330) was used to cross-validate and further evaluate the utility of the FTS.
2. Method
2.1. Participants
Participants were undergraduate students in psychology (n = 292) and business (n = 188) who completed a 30-min, online questionnaire as part of a larger investigation about the economic downturn and mental health. After an examination of
the students descriptive statistics (e.g., means and variances) showed that the groups were highly similar across all of the
variables we intended to examine, we collapsed across the samples to create the nal sample of 480 participants. The sample
mean age was 19.66 (SD = 3.62). It contained 277 women, 198 men, and ve participants who did not report their sex.
2.2. Measures
Financial Threat Scale (FTS; Table 1). The ve-item FTS was developed in accord with existing threat measures (e.g., Fiksenbaum et al., 2006; Lee-Baggley, DeLongis, Voorhoeve, & Greenglass, 2004) and threat research (e.g., McGregor, Nash,
Mann, & Phills, 2010; Peacock & Wong, 1990). It was intended to cover a wide breadth of the nancial threat hypothetical
construct with as few items as possible. Its ve items cover areas of uncertainty, risk, perceived threat (included to bolster
face validity), worry, and cognitive preoccupation with ones current personal nances. All ve items are endorsed along
ve-point scales, the endpoints of which change slightly to reect item content (see Kline, 1993).
The following scales are grouped in three categories of validating measures. First, Psychological Health Measures will be
used to evaluate the FTS concurrent validity. Second, Financial Situation Measures will be used to show the FTS convergent
and incremental validity. Finally, conceptually related Individual Differences Measures will be used to further demonstrate
the FTS concurrent and incremental validity.

Table 1
Financial Threat Scale (FTS).
Please indicate how you feel about your current nancial situation by answering the following questions
1. How uncertain do you feel?
1 = Not At All to 5 = Extremely Uncertain
2. How much do you feel at risk?
1 = Not At All to 5 = A Great Deal
3. How much do you feel threatened?
1 = Not At All to 5 = Extremely Threatened
4. How much do you worry about it?
1 = Not At All to 5 = A Great Deal
5. How much do you think about it?
1 = Not At All to 5 = A Great Deal
Note. Higher scores reect greater perceived nancial threat.

Z. Marjanovic et al. / Journal of Economic Psychology 36 (2013) 110

2.3. Psychological health measures


General Health Questionnaire-12 (GHQ12; Goldberg et al., 1997). The GHQ-12 is a widely used, brief measure of psychological distress issues, such as depression, anxiety, social functioning, and condence. Although factor analytic studies have
revealed the GHQ-12 consists of anywhere from one to three factors, these factors tend to be highly intercorrelated and offer
few advantages in differentiating groups over the original single-factor GHQ-12 score (Gao et al., 2004). We therefore scored
the GHQ-12 as a single-factor measure. Response options range from 0 = Never to 5 = All The Time, with higher scores reecting lower levels of psychological distress. A sample item is, Been feeling reasonably happy, all things considered?
Brief Symptom Inventory (BSI; Derogatis, 1993). The BSI is a broad measure of clinically related symptoms of psychological
distress. It includes subscales such as somatization, interpersonal sensitivity, and psychoticism. However, for the purposes of
our broader questionnaire on the economic downturn and mental health, only the seven-item depression subscale and
six-item anxiety subscale were administered. The items in each subscale ask respondents to indicate how they have been
feeling recently. Both subscales have good psychometric properties and have been widely used in psychological health research (Derogatis & Savitz, 2000). Response options range from 1 = Not At All to 5 = Extremely. Higher scores reect greater
recent symptoms of depression and anxiety. A sample item from the depression scale is, Feeling no interest in things.
Prole of Mood States-Short Form-Total Mood Disturbance (P-TMD; Shacham, 1983). The P-TMD is a 37-item measure on
which individuals report the extent to which a series of mood-related adjectives describe them recently. We adapted the
P-TMDs instructions slightly to query respondents about their recent feelings about their nancial situations (Using the
scale below, indicate your recent feelings about your nancial situation.) The measure contains six subscales (fatigueinertia, vigoractivity, tensionanxiety, depressiondejection, angerhostility, and confusionbewilderment). For our study, we calculated a single score of Total Mood Disturbance by subtracting a weighted vigor subscale score from the sum of the other
ve subscales (see Curran, Andrykowski, & Studts, 1995). The P-TMD has good psychometric properties and due to its exibility and breadth is widely used in research (Curran et al., 1995). All items were endorsed along a ve-point scale ranging
from 1 = Not At All to 5 = Extremely. Higher scores reect greater total mood disturbance. A sample item from the vigor subscale is, Energetic.
2.4. Financial situation measures
Economic Hardship Scale (EHQ; Lempers, Clark-Lempers, & Simons, 1989). The 10-item EHQ queries the extent to which
the respondent has had to make cutbacks to his or her lifestyle due to nancial difculties in the last few years. The EHQ has
shown acceptable psychometric properties in diverse samples (Wadsworth et al., 2011). The EHQ is endorsed on a four-point
scale, ranging from 1 = Never to 4 = Very Often. Greater scores reect greater nancial deterioration. A sample item is,
Change food shopping or eating habits to save money?
Financial Well-Being Scale (FWBS; Norvilitis et al., 2003). The FWBS is made up of eight statements that describe the state
of and changes to an individuals nancial situation (e.g., changes to personal debt levels). For each item, the respondent has
to report the extent to which the statement describes their current nancial situation. Items are endorsed on a ve-point
scale ranging from 1 = Strongly Agree to 5 = Strongly Disagree. Higher scores reect higher levels of perceived nancial
well-being. A sample item is, I think I am in good nancial shape. The FWBS has yielded good estimates of reliability
and validity in previous research on personal nances (Norvilitis & MacLean, 2010; Norvilitis et al., 2003).
Income Change Scale (ICS; adapted from Lempers et al. (1989)). The ICS is a single-item measure which queries respondents as to what extent their income has changed over the last few years; specically, Over the last few years, how has your
nancial situation changed? Response options range from 1 = Greatly Worsened to 5 = Greatly Improved with the midpoint
representing no change. Higher scores reect an improved nancial situation over the last few years.
2.5. Individual differences measures
Penn State Worry Questionnaire (PSWQ; Meyer, Miller, Metzger, & Borkovec, 1990). The PSWQ is a 16-item measure of
uncontrollable and severe characteristics of worry that are typical of individuals with generalized anxiety disorder. Respondents indicate how much each item describes them in general. The PSWQ has excellent psychometric properties and is
widely used in health psychology research (Startup & Erickson, 2006). Response options range from 1 = Not At All Typical
Of Me to 5 = Very Typical Of Me. Higher scores reect greater trait worry. A sample item is, My worries overwhelm me.
Ruminative Responses Scale (RRS; Treynor, Gonzalez, & Nolen-Hoeksema, 2003). The RRS is a 20-item, psychometrically
sound, trait rumination measure that contains three subscales: brooding, reection, and depression-related. For our purposes,
only the ve-item brooding and ve-item reection subscales were used as the depression-related subscale was redundant
with other measures in our investigation. The ve brooding items query a respondents tendency to look back and engage
in self-blame for the way negative events unfolded. Quite differently, the ve reection items query a respondents tendency
to look back and re-examine events when feeling down, sad, or depressed, but with a neutral, value-free attitude. Response
options range from 1 = Almost Never to 4 = Almost Always. Higher scores on either subscale reect greater rumination. A sample item from the brooding subscale is, I think, What am I doing to deserve this? A sample item from the reection scale is,
Go someplace alone to think about your feelings.

Z. Marjanovic et al. / Journal of Economic Psychology 36 (2013) 110

General Self Efcacy Scale (GSE; Schwarzer & Jerusalem, 1995). The 10-item GSE measures individuals optimistic belief in
their abilities to effect change in their environment and cope with adversity. It is widely used and has acceptable psychometric properties (Luszczynska, Scholz, & Schwarzer, 2005). Items are endorsed on a four-point scale ranging from 1 = Not
At All True to 4 = Exactly True. Higher score reect greater self-efcacy. A sample item is, I can usually handle whatever
comes my way.
2.6. Procedure
In samples of both psychology and business students, data were collected via a 30-min, online questionnaire between late
2009 and early 2010. Internet-mediated research has been shown to yield data that are equivalent in reliability and validity
to data collected through traditional paper-and-pencil approaches (Gosling, Vazire, Srivastava, & John, 2004; Kraut et al.,
2004). Upon accessing the website that hosted the questionnaire, participants read an informed consent statement and
agreed to participate by clicking on a Next icon at the bottom of the page. After completing the questionnaire, participants
read a short debrieng statement and were thanked for their participation. From this sample of 480, a small subset of participants (n = 150) was randomly selected to evaluate the underlying factor structure of the FTS. The remaining larger subset
(n = 330) was used to cross-validate and further evaluate the utility of the FTS.
3. Results
3.1. Psychometric analysis of the Financial Threat Scale (FTS)
A principle components analysis (PCA) was rst conducted in the smaller subset of the sample to evaluate the component
structure of the FTS. We began by closely scrutinizing the assumptions underlying factor analytic procedures in our data
such as variable linearity, normality, and absence of outliers. These assumptions were all upheld. Next, the factorability of
the FTS items was assessed by examining the correlation coefcients among the FTS items. All of these correlations exceeded
.47, which suggests they were all measuring some similar construct (Tabachnick & Fidell, 2007). Finally, we calculated Bartletts Test of Sphericity, chi-square (10) = 450.16, p < .001, and the KaiserMeyerOlkin Measure of Sampling Adequacy, .78.
Given that both indexes indicated these data were suitable for PCA, we then set our rules for component extraction and item
retention. We decided that, rst, components must yield eigenvalues P1.0 (i.e., the Kaiser criterion; Tabachnick & Fidell,
2007). Second, items must yield component loadings of P.4 on the rst hypothesized component. Third, if more than one
component is extracted, each items loading on the rst component must be greater than twice as large as on any other component (Kline, 1993). We then proceeded to conduct the PCA.
As we expected, results of the PCA showed that all of the FTS items loaded onto a single component (eigenvalue = 3.45),
which accounted for 68.94% of the variance in the measure. Only one component was extracted and thus no rotation was
conducted. All item loadings were high, between .76 and .88. The FTS internal consistency was also shown to be good, well
above the standard criterion of .70, at alpha = .89. The FTS mean and standard deviation were 2.78 and 0.99, respectively.
Calculated in the larger subset of the sample, the underlying component structure and internal consistency of the FTS was
re-checked and revealed similar ndings to those found in the smaller subset. The FTS again revealed a single component
(eigenvalue = 3.54), which accounted for the majority of the variance in the measure (70.73%). Once again, all of the FTS item
loadings were between .78 and .89, its alpha statistic was high, .90, and its mean score was again just below the scales midpoint at 2.74 (SD = 1.03). These data show the FTS reliably measures a unidimensional construct and has high internal
consistency.
3.2. Main analysis
Calculated in the larger subset of the sample, descriptive statistics and correlation coefcients are presented in Table 2.
The correlation analysis revealed that the FTS was signicantly associated with all of the Financial Situation Measures, which
describe the state of and changes to an individuals nancial status. Financial threat was highest in individuals who reported
low nancial well-being (r = .54, p < .001), worsening income change over the last few years (r = .48, p < .001), and high
economic hardship (r = .44, p < .001). All of these correlations can be classied as moderate to strong in magnitude (Cohen,
1988). Collectively, these results showed that the state of an individuals personal nances is reected by his or her level of
perceived nancial threat, in full support of Hypothesis 1. The FTS also correlated with all of the Psychological Health Measures in the expected directions, in full support of Hypothesis 2. It was positively correlated with psychological distress (i.e.,
the reverse score of the GHQ-12; r = .38, p < .001), depression (r = .36, p < .001), anxiety (r = .34, p < .001), and mood disturbance as related to ones current nancial situation (r = .65, p < .001).
In addition, the FTS correlated with the Individual Differences Measures in the expected directions as well. Perceived
nancial threat was highest in participants who reported high levels of trait worry (r = .29, p < .001) and brooding (r = .21,
p < .001), and lowest in participants with high generalized self-efcacy (r = 24, p < .001). The correlation between the
FTS and ruminative reection was not statistically signicant. These ndings are in complete support of Hypothesis 3.
A potential confound we considered was whether the FTS correlations with worry and rumination were articially high
due to the fact that the FTS contains items assessing individuals worry and cognitive preoccupation about their nancial

Z. Marjanovic et al. / Journal of Economic Psychology 36 (2013) 110

Table 2
Descriptive and correlation statistics for all study variables (n = 330).
1

1. FTS
2. GHQ
3. BSI-D
4. BSI-A
5. P-TMD
6. EHQ
7. FWBS
8. ICS
9. PSWQ
10. RRS-B
11. RRS-R
12. GSE

.38c
.36c
.34c
.65c
.44c
.54c
.48c
.29c
.21c
.09
.24c

.69c
.61c
.43c
.18b
.28c
.30c
.56c
.47c
.12a
.44c

M
SD
Alpha

2.74
1.03
.90

2.91
0.87
.86

.45c
.25c
.19b
.17b
.43c
.44c
.17b
.16b

.54c
.67c
.49c
.32c
.25c
.14a
.22c

2.08
1.02
.93

2.07
0.81
.90

10

11

12

.52c
.21c
.18b
.10
.33c

.17b
.15b
.02
.22c

.52c
.12a
.32c

.30c
.24c

.08

3.61
0.92
.80

2.84
0.86

3.21
0.78
.90

2.63
0.69
.79

2.41
0.70
.77

3.04
0.49
.89

.78c
.42c
.24c
.21c
.24c
.43c
.50c
.21c
.27c
2.21
0.93
.89

.51c
.35c
.15b
.13a
.13a
.11a
1.75
0.60
.85

Note. FTS = Financial Threat Scale; GHQ = General Health Questionnaire-12; BSI-D and BSI-A = Brief Symptom Inventory, Depression and Anxiety, respectively; P-TMD = Prole of Moods State-Short Form-Total Mood Disturbance; EHQ = Economic Hardship Questionnaire; FWBS = Financial Well Being Scale;
ICS = Income Change Scale; PSWQ = Penn State Worry Questionnaire; RRS-B and RRS-R = Ruminative Responses Scale, Brooding and Reection, respectively; GSE = General Self-Efcacy Scale.

p < .10.
a
p < .05.
b
p < .01.
c
p < .001.
Table 3
Hierarchical regressions of nancial situation measures and the Financial Threat Scale on four psychological health measures (n = 330).
Criterion
GHQ

Variables in step
1

2
BSI-D

2
BSI-A

2
P-TMD

Predictor
EHQ
FWBS
ICS
FTS
EHQ
FWBS
ICS
FTS
EHQ
FWBS
ICS
FTS
EHQ
FWBS
ICS
FTS

SE
.02
.05
.12
.27
.17
.05
.09
.27
.25
.05
.01
.30
.24
.32
.07
.28

.09
.07
.06
.06

R2

b
.02
.05
.12
.32c

.10
.07
.07
.06

.11
.05
.09
.30c

.11
.08
.08
.07

.15
.04
.01
.30c

.06
.04
.04
.04

.18
.36c
.08
.35c

DR 2

.11

.17c
.09

.06c

.15c

.06c

.07

.13c
.53

.06c

.61c

.08c

Note. All gures are taken from the second step of the regression.
b
p < .01.
a
p < .05.
c
p < .001.

situations. Although the FTS items are specically focused on how individuals feel about their current nancial situation
and the personality variables assess generic traits, we sought to disentangle this potential confound. To do this we calculated
two new composite variables of the FTS, one without item 4, which assesses worry, and one without item 5, which assesses
cognitive preoccupation. We then correlated these two new variables with trait worry and ruminative brooding. In each case
the change in correlation was slight. The FTS (without item 4) correlated with worry (r = .27, p < .001) at a similar magnitude
as was reported with the ve-item FTS measure. Similarly, the FTS (without item 5) also correlated at about the same
strength as with the ve-item FTS measure (r = .20, p < .001). Thus, these results show there is a negligible confounding effect
of the FTS item content on its correlations with the personality variables.
In the next stage of the analysis, four hierarchical regressions were run to evaluate whether the FTS would account for
unique variance in psychological health measures over-and-above that of the Financial Situation Measures (Hypothesis
4). In each hierarchical regression, the Financial Situation Measures (i.e., EHQ, FWBS, and ICS) were entered in the rst block
of the model and the FTS was entered in the second. The four Psychological Health Measures constituted the four criterion
variables used in each regression (i.e., GHQ, BSI-D, BSI-A, and P-TMD).

Z. Marjanovic et al. / Journal of Economic Psychology 36 (2013) 110


Table 4
Hierarchical regressions of individual differences measures and the Financial Threat Scale on four psychological health measures (n = 330).
Criterion

Variables in step

Predictor

GHQ

PSWQ
RRS-B
RRS-R
GSE
FTS

2
BSI-D

2
BSI-A

2
P-TMD

PSWQ
RRS-B
RRS-R
GSE
FTS
PSWQ
RRS-B
RRS-R
GSE
FTS
PSWQ
RRS-B
RRS-R
GSE
FTS

SE
.36
.26
.02
.42
.16
.18
.47
.09
.19
.20
.29
.41
.07
.06
.22
.10
.06
.05
.06
.47

R2

DR2

.06
.07
.06
.08
.04

.33c
.21a
.02
.24c
.18c

.42c

.07
.07
.06
.09
.04

.15
.34c
.06
.10
.22c

.10
.09
.07
.11
.05

.05
.06
.05
.08
.04

.23
.27c
.03
.22
.24c
.09
.05
.06
.04
.60c

.45c
.31

.36c
.25

.05c

.29c
.13

.03c

.04c

.45c

.32c

Note. All gures from the second step of the regression.


a
p < .05.
b
p < .01.
c
p < .001.

Results supported Hypothesis 4 showing that the FTS accounted for signicant amounts of variance over-and-above the
Financial Situation Measures for all four criterions (Table 3). In the rst regression, the FTS accounted for an additional 6% of
the variance in the GHQ (b = .32, p < .001). In the second, it accounted for another 6% in depression (b = .30, p < .001). In the
third, the FTS explained another 6% of the variance in anxiety (b = .30, p < .001). Finally, in the last regression, the FTS accounted for an additional 8% of the variance in total mood disturbance (b = .35, p < .001). In addition to the correlations
above, these ndings suggest that the FTS is more closely related to psychological health outcomes than existing descriptive
measures of ones nancial situation.
To test Hypothesis 5, that the FTS would account for signicant amounts of variance over-and-above personality, we reran the hierarchical regressions this time adding Individual Differences Measures in the rst block of the model instead of
Financial Situation Measures. If the FTS continued to account for signicant amounts of variance in Psychological Health
Measures after controlling for the effects of Individual Differences Measures, it would be clearer that the FTS reects a distinct set of threatening feelings about ones nances that cannot be explained by conceptually relevant personality traits.
Similar to the results of the rst set of regressions, results supported Hypothesis 5 showing that the FTS accounted for
signicant amounts of variance over-and-above all four criterion measures (Table 4). The FTS accounted for an additional
3% of the variance in the GHQ (b = .18, p < .001), another 5% in depression (b = .22, p < .001), it explained 4% of additional
variance in anxiety (b = .24, p < .001), and nally, an additional 32% of the variance in total mood disturbance in relation to
personal nances (b = .60, p < .001). In sum, these ndings suggest the FTS accounts for unique variance in psychological
health issues over-and-above what can be accounted for by existing nancial situation measures and conceptually-relevant
personality traits.
4. Discussion
The current economic downturn has had a major negative impact on peoples ability to provide for themselves and their
loved ones. As economic downturns make personal nancial situations more precarious (e.g., creating higher likelihoods of
job loss, investment loss, etc.), they are also associated with a variety of deleterious psychophysiological outcomes, such as
psychological distress, suicide ideation, marital discord, and cardiac problems. We propose an important yet unexplored psychological construct, we call perceived nancial threat, connects the two phenomena. When the security and stability of individuals personal nances begin to deteriorate, this is associated with increased fear, uncertainty, and preoccupation with
regards to being able to maintain ones living standards. The more intensely this feeling is experienced, the greater an individual should experience common stress reactions, such as psychological distress and depression. We argue that perceived
nancial threat is also intimately related to personality characteristics, which are they themselves predictive of psychological and health outcomes. That is, it is not simply a matter of how healthy a persons nancial situation is. An individuals
disposition to feel threatened is also a meaningful factor in psychological health outcomes.
The purpose of this study was to evaluate the psychometric quality of the newly developed Financial Threat Scale (FTS),
which we created to measure this untapped construct. In order to do this we rst set out to demonstrate an association be-

Z. Marjanovic et al. / Journal of Economic Psychology 36 (2013) 110

tween the FTS and nancial deterioration measures, and to both psychological health outcomes and personality traits that
are known correlates of generic perceived threat. The data we used were collected at the height of the current economic
downturn between 2009 and 2010. We believe this aspect of the study boosts the ecological validity of our ndings as
the health and recovery of the global economy at this time was still very much damaged and oundering. In this uncertain
economic context, we rst established the FTS was unidimensional and reliable in two sets of data. We then set out to assess
the FTS validity by examining its relations with conceptually similar variables and important criterion variables.
In the rst stage of our analysis, FTS scores were positively correlated with Financial Situation Measures, such that higher
levels of nancial threat were associated with greater levels of economic hardship, less nancial well-being, and worsened
income change over the last few years. This supported our rst and main hypothesis, which stated that nancial threat
would be highest in individuals with unstable and insecure personal nancial situations. It follows logically from this that
as an economic downturn deteriorates the economic environment and, in turn, worsens nancial situations for individuals
within it, levels of perceived nancial threat in the population likely rise. Oppositely, as an economy improves, nancial
threat levels likely diminish. Note that we speculate here as the cross-sectional nature of these data does not allow us to
make causal claims. However, it seems to us that this is the most logical explanation. In the future we and other interested
researchers will track these relations longitudinally to better be able to empirically test this hypothesis.
Next, we correlated the FTS with Psychological Health Measures under the expectation that greater nancial threat would
be related to heightened psychological distress, depression, anxiety, and mood disturbance. This hypothesis was fully supported as the strength of the correlations varied from moderate to strong in magnitude. By comparison, correlations between
the Financial Situation Measures and Psychological Health Measures were almost all lower. This suggests that the perceptions of nancial threat may be a more important factor than nancial troubles in the historical relationship between economic hardship and psychological health.
In the third stage of our analysis we showed that despite being intimately related to ones personal nancial situation,
nancial threat varies in individuals in accordance with their personality dispositions. Specically, we expected that individuals high in trait worry and rumination and low in generalized self-efcacy would report high levels of nancial threat. This
hypothesis was largely supported with one exception. The FTS did not correlate with the reection subscale of the Ruminative Responses Scale, which itself did not correlate with nancial well-being or worsening income change. The telling difference between the reection and brooding subscales is that the item content in the reection subscale assesses looking back at
events in a blameless way, whereas the brooding subscale items are lled with self-blame content. Self-blame then seems to
be the important element that connects rumination with both feeling threatened about ones nances and psychological
health.
In the nal stage of our analysis, we further demonstrated that the nancial threat construct has trait-like qualities whilst
still being meaningfully inuenced by situational factors. The FTS was rst added to hierarchical regression models which
had Financial Situation Measures predicting Psychological Health Outcomes. In a second set of regressions, the FTS was
added to hierarchical regression models containing Individual Differences Measures as predictors of psychological health.
The results for both sets of regressions revealed that the FTS accounted for variance in health over-and-above the other predictors in the model, be they situational or dispositional. Thus, nancial threat is more than just another personality trait,
reecting an enduring dispositional style, or a situational measure reecting undulating environmental pressures. These data
suggest nancial threat is more like a combination of the twoheavily inuenced by situational pressures, but naturally
higher in some individuals than others.
4.1. Future directions
This study showed that the FTS theoretical and practical value rests in its ability to bridge the gap between traditional
measures of psychological health and seemingly unrelated measures of personal nances. Future researchers may wish to
longitudinally assess the trait-like qualities of the FTS further by measuring its testretest reliability. If our speculations
about the FTS are correct and its levels are inuenced by situational nancial factors, the stability of the FTS reliability
should be the highest under low levels of nancial situation change.
A multi-measurement, longitudinal analysis of nancial threat has the added benet of potentially showing directionality
of the relations between economic environment, personal nancial situation measures, and personality. Due to the historically effortful nature of this type of data collection, researchers in this area have mostly only able speculate upon cross-sectional data. However, given the extent to which data collection has been simplied with the Internet and computermediated questionnaires, this approach is not as unwieldy as it once seemed (Gosling et al., 2004; Kraut et al., 2004).
4.2. Conclusion
The way people appraise their nancial situation and how these appraisals affect their psychological health have received
little attention from psychological researchers. Based on our ndings, perceived nancial threat is related to, and distinct
from, deteriorated nances and individual differences. Our research has demonstrated that the FTS is useful as an indicator
of both psychological suffering, with probably its greatest advantage over other indicators being its generalizability. Most
adults have a nancial life which at times improves, worsens, or remains the same. They work to maintain and improve
the security and stability of their personal nances, which in turn are meant to maintain and improve their quality of life.

Z. Marjanovic et al. / Journal of Economic Psychology 36 (2013) 110

As has been demonstrated in this study, nancial threat is deserving of further consideration because as a theoretical construct, it links routine psychological stress appraisals with personal nancial situations and personality, and has meaningful
relations with psychological health and well-being. From a practical standpoint, the FTS provides researchers with a brief
and sound means for measuring perceived nancial threat, which according to these data at least, can be used as an indicator
of maladaptive psychophysiological functioning.
Acknowledgements
The authors thank the Faculty of Health of York University, Joana Katter, Melina Condren, Dean Hodge, Constance Mara,
Karina Meysel, Lisa Santorelli, and Jessica Campoli for their contributions to this research. This research was supported by
SSHRC Doctoral and Post-Doctoral funding to the rst author.
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