key: cord-1012046-4yiw9jdv authors: Yazdanparast, Atefeh; Alhenawi, Yasser title: Impact of COVID‐19 pandemic on household financial decisions: A consumer vulnerability perspective date: 2022-02-21 journal: Journal of Consumer Behaviour DOI: 10.1002/cb.2038 sha: 41c7bf68cab57bcd7e0f1c77d97d5e4a7005fea2 doc_id: 1012046 cord_uid: 4yiw9jdv This study joins a rapidly growing body of research that investigates the multi‐faceted impacts of the Covid‐19 pandemic on consumers' behavior. Specifically, we examine how the pandemic‐induced state of vulnerability impacts consumers' saving, investing, and spending decisions. Using survey data from four different countries (i.e., USA, UK, South Africa, and Mexico), we examine the role of personality on consumer vulnerability, create an index of consumer vulnerability, and establish the role of vulnerability in impacting important financial decisions. We report evidence that perceptions of vulnerability and the pandemic‐induced changes in financial and consumption behaviors vary across residents of developed and developing countries. The results indicate that vulnerability is experienced and reflected through a multitude of fears and concerns and is influenced by personality traits (agreeableness, neuroticism, conscientiousness, need for material resources, and need for body resources) and can result in increased spending on products/services that are not normally perceived as necessities. Our findings carry important theoretical and managerial implications. Coronavirus Disease 2019 was officially declared a pandemic by the World Health Organization (WHO) on March 11, 2020. To slow down the spread of the virus, many countries went into lockdown, mandating people to stay at home and closing many sectors of the economy for months. During the second half of 2020, with the emergence of new variants, the second and third waves of the pandemic were declared, and many countries and states considered, or even implemented, new tighter restrictions (e.g., on December 19, 2020, the BBC reported that a fourth tier of coronavirus restrictions is expected to be introduced in London and south-east England). By first quarter of 2021, and despite the cheerful reports of successful vaccine results, most countries around the world have kept the social distancing, mask-wearing mandates, and travel restrictions almost intact. 1 These restrictions, being enforced for more than a year, have posed a threat to people's financial wellbeing and dramatically reduced their quality of life. For instance, stay-at-home and social distancing orders have cut individuals off from social interactions and rituals, and often from their sources of income. The news reports of mounting death tolls have made most people scared and fearful. The shortage of supply of basic necessary medical equipment and the overwhelmed hospital operations have posed additional threats and concerns (Campbell & Murphy, 2020; Jacobs et al., 2020; Togoh, 2020) . At the retail level, consumers have experienced scarcity of necessary items (e.g., disinfectants and masks). Besides, lack of information, misinformation, and conflicting information have weakened consumers' ability to understand, plan, and cope with the health, economic, and social threats. In fact, the extent to which both households and the economy have been upended is without a recent precedent. This is because the speed at which the restrictions were implemented, and economic dislocation occurred has made it difficult to deliver financial support to households and businesses in a timely fashion. As a result, people were left to deal with health-related threats, reduced social interactions, unprecedented changes to normal ways of life, and a gloomy 1 The first draft of this article was produced in March 2021. financial future. These unusual circumstances have led to remarkable psychological impacts including stress and depression and noticeable shifts in consumers' behaviors (Galoni et al., 2020) . According to WHO, the coronavirus pandemic is not only an epidemiological crisis, but is also a psychological and financial crisis. That is, not only people's health is threatened, but also are their financial wellbeing and psychological stability. Anecdotal observations indicate that the pandemic has provoked a state of vulnerability that has caused remarkable shifts in consumers' perceptions and behaviors. And are these reactions universal or do they differ across countries? The extant literature defines consumer vulnerability as a temporary situation where consumers lose control and make decisions influenced by external factors (Baker, 2006; Baker et al., 2005) . This literature has focused on singular contexts in which a subset of consumers is embedded and has ignored the collection of selves that exist across consumption environments (e.g., Baker et al., 2005; Hill & Stamey, 1990) . In contrast, we argue that consumers vary in the extent to which they experience the state of vulnerability. Specifically, both the designation and magnitude of consumer vulnerability may vary from individual to individual, from country to country, and across consumption environments, and this variability influences the coping mechanisms that consumers pursue (Bronfenbrenner & Morris, 2006) . Thus, it is relevant to examine how individual characteristics affect reactions to the pandemic, and how these relationships vary across social, political, and economic contexts. We draw on the Meta-Theoretic Model of Motivation (3 M; Mowen, 2000) , indicating that personality attributes influence individuals' inclinations and proclivity, to examine the role of individual characteristics on vulnerability experiences. Moreover, we draw our sample from four regions, namely the North America (i.e., USA), Europe (i.e., UK), Africa (i.e., South Africa), and Latin America (i.e., Mexico). This selection is motivated by the need to maximize the potential variations in Covid-19 severity, wealth, socioeconomic, political, and cultural conditions across these countries. This approach responds to recent calls for academic research that spans beyond a specific country to examines behavioral changes in response to the pandemic (Liu et al., 2020) . According to psychological reactance theory (Brehm, 1966) , humans react with defensive behavioral and attitudinal changes when their freedom to control their own lives is threatened. If the threat is substantial, it may provoke long-lasting coping mechanisms. Accordingly, we evaluate the effects of consumer vulnerability, experienced due to the pandemic, on households' financial and consumption decisions. That is, unlike the majority of literature, which focuses on immediate responses during the pandemic, we explore the possibility that the pandemic-induced vulnerability will affect consumers' behaviors post-pandemic as well. The results provide evidence that personality traits are important antecedents of consumer vulnerability, and pandemic-induced vulnerability is substantial across different regions and countries but varies among counties in terms of magnitude. We find that vulnerability is reflected through high levels of concerns related to professional life, social life, and wellbeing of loved ones, among others, and that it impacts saving, investing, and spending decisions of households. Our investigation provides specificity regarding the change in various spending categories (e.g., alcohol, transportation, personal care products, entertainment, charity, and luxury items) and identifies factors that contribute to such changes. Our work contributes to literature in several ways. First, our approach links together a growing body of research on household finance with consumer behavior research. Household finance is an emerging field of research (Alhenawi et al., 2022; Campbell, 2006) that examines the role of individual and situational/environmental conditions in addition to household's financial profile in affecting household decisions (e.g., Xu et al., 2017; Yazdanparast & Alhenawi, 2017; Zhao, 2020) . We attempt to explain the impact of the pandemic on consumers' state of vulnerability and how such experiences impact important decisions such as overall spending (vs. investing and saving) and specific spending patterns at the household level. Second, in line with percepts of psychological reactance theory, suggesting that acute stress might cause long-term reactions, our work focuses on potential post-pandemic changes in financial and consumption behaviors. Third, the study examines these effects in a multi-country framework. By doing so, we are controlling for variations in pandemic intensity and available support, which varies across countries. The existing research on the impact of the Covid-19 pandemic can be divided into three broad groups. The first group focuses on pandemic's impacts at the macro level and primarily addresses financial markets movements. For instance, Sharif et al. (2020) provide evidence that the effect of the Covid-19 on the geopolitical risk is substantially higher than on the economic uncertainty. Mnif et al. (2020) find that the Covid-19 risk is perceived differently over the short and the long-run and may be firstly viewed as an economic crisis. Ashraf (2020) shows that government announcements regarding protective measures (e.g., social distancing) have a direct, negative effect on stock market returns. Further, government announcements regarding public awareness programs (e.g., testing and quarantine policies and income support packages) result in positive market reactions. The second group of Covid-19 research has focused on marketing strategy and how the retail industry has been impacted by, and reacted to, the pandemic (e.g., He & Harris, 2020) . For instance, Corbet et al. (2021) investigate sentiments generated by coronavirusrelated news and reputational-based contagion (i.e., the impact of the coronavirus outbreak on companies related to the term "corona"). Dannenberg et al. (2020) examine the impact of the pandemic on online grocery retail markets. Similarly, Pantano et al. (2020) provide guidelines for how retailers can handle the pandemic and discuss retail strategies during a period of emergency. A third stream of research has focused on the psychological impacts of the pandemic on individuals and their behaviors, specifically, coping behavior (e. g., Campbell & Murphy, 2020; Laato et al., 2020) . For instance, Kirk and Rifkin (2020) examine behaviors during three phases: reacting (e.g., hoarding and rejecting), coping (e.g., maintaining social connectedness, do-it-yourself behaviors), and long-term adapting (e.g., transformative changes in consumption and individual and social identity). Other research examines the emotional responses to the pandemic (Galoni et al., 2020) and finds that cues of contagious disease increase both fear and disgust. Huang and Sengupta (2020) draw on insights from evolutionary psychology and find that disease threat reduces consumers' relative preference for category-typical, mass products, as compared to category-atypical, niche products. Despite the significant contributions, research on the impacts of the pandemic on consumer behavior has a few limitations. The majority of research on this topic is conceptual (e. g., Campbell et al., 2020; Sheth, 2020) or relies on rather small samples (e. g., Laato et al., 2020) and draws conclusions mainly from a single country (e. g., Liu et al., 2020; Stanciu et al., 2020) . As such, researchers have called for the examination of household responses across different economies to explore potential differences between developed and emerging economies (Liu et al., 2020) . Moreover, extant research has merely examined consumption patterns during the pandemic with little attention to the post-pandemic changes in consumer behavior (see Alhenawi & Yazdanparast, 2021 for an exception). Furthermore, many studies have largely focused on purchase-related decisions and ignored other decisions related to interpersonal relationships, individuals' emotional well-being, and financial situation. Lastly, researchers have generally focused on individual consumption choices and rarely examined household decisions. Few studies that focus on household behavior amid the pandemic are generally limited to Chinese households. Yue et al. (2020) , for instance, use data from the Survey and Research Center for China Household Finance (CHFS) and find that households who know someone infected with Covid-19 are more susceptible to losing confidence in the economy and are more likely to change their risk attitude and become risk-averse. Liu et al. (2020) rely on the same data (i.e., CHFS) and report a significant decline in households' consumption during the outbreak. They also find that urban households are more vulnerable than rural households. Nevertheless, their findings lack specificity because they study consumption at an aggregate level and do not examine specific consumption decisions (e.g., education, healthcare, food, and beverage). In this study, we attempt to address the aforementioned research gaps and focus on the impact of the Covid-19 pandemic on household financial and consumption decisions. The focus on household finance is warranted given the far-reaching impacts of household's financial decisions on consumer welfare, marketing practices, financial service providers' strategies, and the stability and reliability of the financial system (Lynch Jr, 2011; Pirog & Roberts, 2007; Yazdanparast & Alhenawi, 2017 The term consumer vulnerability is used to describe a variety of difficult situations that consumers face. Generally, consumer vulnerability occurs when control is not in the consumer's hands, creating a state of dependence on external factors. In reality, vulnerability is an experience that people actively work to reduce in pursuit of getting their lives back to normal (Baker, 2006) . Baker et al. (2005) More recently, consumer vulnerability research has focused on the relationship between resource scarcity, decision-making, and vulnerability (Briers et al., 2006; Hamilton et al., 2019) . This line of research defines scarcity as a subjective sense of having more needs than available resources (Mullainathan & Shafir, 2013) and describes resources as assets that a person yearns to achieve as a desired endstate (Dorsch et al., 2017) . According to Hill and Sharma (2020) , the vast number of resources that contribute to consumer vulnerability can be grouped into individual resources, interpersonal resources, and structural resources. Individual resources are self-related assets and capabilities of consumers such as money, intelligence, and physical and mental health. Interpersonal resources refer to social factors such as social capital, belongings, and social support. Structural resources encompass marketplace and environmental factors such as common business practices, laws and enforcement, and marketspace configurations. Similarly, Baker et al. (2007) model of vulnerability identifies individual characteristic, community characteristics, and external conditions as factors influencing vulnerability experiences and resulting in behavioral, value-related, and policy changes. Overall, prior research has argued that the causes of vulnerability may be associated with individual characteristics (e.g., age, physical capabilities), social phenomena (e.g., stereotypes, prejudicial treatment), business practices (e.g., store layouts, marketer manipulations), and environmental forces (e. g., hurricanes, tsunamis; Baker et al., 2005) . Thus, vulnerability arises from the influence of individual states and characteristics and structural/environmental conditions within a context where consumption goals may be hindered (Baker et al., 2007; Peñaloza, 1995) . The structural/environmental factors (e.g., economic welfare, country-level poverty, and overall economic stability) vary across countries but are relatively similar within each nation (refer to Hofstede, 2001) . Therefore, it is paramount to explore how the current pandemic-induced vulnerability varies across different socioeconomic environments. We focus on four countries (i.e., USA, UK, South Africa, and Mexico) located in four different regions to maximize the potential variations in wealth, socioeconomic, political, and cultural factors as well as the impact of Covid-19 across these countries. For instance, two countries in our sample are developed countries (USA and UK) and two are developing countries (South Africa and Mexico) with differing levels of Covid-19 severity. We anticipate that the severity of the Covid-19 pandemic will intensify consumers' vulnerability, while the economic wealth of the nation will mitigate it. We hypothesize: Hypothesis 1a. The pandemic-induced consumer vulnerability varies with socio-economic/pandemic conditions. In addition to the heterogeneity due to country-level differences in structural/environmental factors, individual traits and characteristics affect consumer experiences and behaviors. In other words, individuals who share common collective programming (i.e., belong to the same country) differ in a manner consistent with their psychological traits, allowing for greater influence of personality (refer to Hofstede, 2001) . Personality traits are the dynamic organization of psycho physiological systems that make up a person's characteristic behavior, thoughts, and feelings (Lin, 2010; Mowen et al., 2007) , and thus, may influence individuals' vulnerability experiences as reflected through fears and concerns. This is in line with research indicating that individuals' appraisal of stressors (as threatening or non-threatening) as well as their abilities to cope with the threats are influenced by personality (Liu et al., 2021) . We draw on the 3 M model, which accounts for how personality traits interact with the situation to influence consumer attitudes and behaviors (Mowen, 2000) . At the elemental level, the 3 M model contains five traits from the big five personality model namely, neuroticism (e.g., tendency to be emotionally unstable and experience anxiety and fear), conscientiousness (e.g., tendency to be responsible, organized, and goal-directed), extroversion (e.g., tendency to be sociable, assertive, and with a high-activity level), openness (e.g., tendency to be perceptive, creative, reflective, and appreciate fantasy), and agreeableness (e.g., tendency to be kind, cooperative, altruistic, trustworthy, and generous), as well as three additional traits namely, need for material resources (e.g., tendency to desire material possession and wealth), need for arousal (e.g., tendency to desire stimulation and excitement and counter fear), and body resource needs (e.g., tendency to devote more time to improve one's body and work hard to stay healthy and in good shape; Mowen et al., 2007; Vollrath, 2001) . Prior research provides evidence for the role of personality in experiencing mental health challenges during crisis. For instance, researchers have found that general psychological responses to crisis vary for individuals high versus low in neuroticism, openness, agreeableness, and conscientiousness (Stadler et al., 2020) . For instance, neuroticism has been associated with adverse mental health outcomes for healthcare professionals who cared for patients with SARS and with negative affects during Covid-19 (Kroencke et al., 2020; Lung et al., 2009) . However, to our knowledge, there are no published studies that systematically examine how a broad set of personality traits (not limited to the big five traits) is associated with consumer vulnerability experiences. This is particularly relevant given the fact that Covid-19 has been both a health crisis (affecting individuals' physical health and body) and a financial crisis (affecting individuals' ability to earn money and possess/keep their material resources) which has posed threats to individuals' lifestyle and changed normalcy. We hypothesize: Hypothesis 1b. The pandemic-induced consumer vulnerability varies with individuals' personality traits. Hill and Sharma (2020) recognize a range of potential consequences of vulnerability as consumers try to cope with their situations and categorize their coping mechanisms as either non-defensive mechanisms (i.e., submitting to the situation) or defensive mechanisms (i.e., resisting or combating the situation). Both mechanisms reflect some kind of change in behaviors compared to the state of pre-vulnerability. This is consistent with Baker et al. (2007) model of vulnerability, recognizing change in behaviors, values, and policies as the consequences of vulnerability. We draw on psychological reactance theory (Brehm, 1966) to explain these behaviors. According to this theory, when something threatens or eliminates people's freedom of behavior, they experience psychological reactance, a motivational state that drives freedom restoration (Rosenberg & Siegel, 2018) . Threats to freedom to control one's life may stem from varying sources including severe adversities and crises, and people's reactions include both psychological and behavioral changes (Cameron & Shah, 2015; Campbell, 2006) . For the most part, vulnerable consumers react in ways that depend on their perceptions of the malleability of a particular context and of their long-term prospects for improving their situation by obtaining more resources or control. Accordingly, the degree of change in behaviors serves to legitimize some combination of individual or structural resource constraints and the lack of control (Hill & Sharma, 2020) . Indeed, ignoring the country level structural/ environmental situations hinders researchers' abilities to meaningfully interpret the role of individual differences in shaping responses during crisis (Eriksson et al., 2018) . As such, we posit that behavioral changes in response to Covid-19 vulnerability vary across countries with different structural/environmental factors. Specifically, we examine change in important household decisions namely, saving, investing, and spending and expect to see more impact on spending patterns of developing countries (vs. developed countries) given the harsher economic impact of the pandemic on these countries. However, we expect a positive effect on post-pandemic saving and investing in developed countries. We hypothesize: Hypothesis 2a. The pandemic-induced consumer vulnerability affects broad household financial behaviors. Hypothesis 2b. The impact of the pandemic-induced consumer vulnerability on household financial decisions varies with socio-economic/pandemic conditions. Household behavior during times of crisis, or unexpected shocks, is explained to be strategic in order to minimize the impact of shocks on household welfare (e.g., Nyamongo, 2002; Sauerborn et al., 1996) . Households have limited resources to allocate to various spending categories. A fundamental trade-off is between spending money on necessities (i.e., items that cannot live without), such as ordinary food and medical care, or on nonessential items such as luxuries (Kivetz & Simonson, 2002) . Such decisions become even more important when facing threats posed by an economic and/or health crisis. The pandemic-induced vulnerability experienced by individuals, then, is expected to impact the allocation of budget to spending categories. American Life Panel (ALP) has identified major categories that comprise household expenditures (e.g., food, beverages, tobacco, clothing, health care and personal care, entertainment, transportation, travel, and education; Chai et al., 2015) . In line with this categorization and to add specificity to our analyses, we examine spending patterns across 10 product/service categories, namely food, alcohol, tobacco, healthcare, education, transportation, personal care, entertainment, charitable contributions, and luxury items. We expect to see a post-pandemic decline in unnecessary, luxury expenditure categories (e.g., luxury items, travel, alcohol, tobacco, and entertainment) and an increase in healthcare, personal care, and education categories. However, we do not expect these results to be consistent across countries with varying socio-economic and pandemic severity conditions. We expect to see a stronger change among households residing in areas that were hit harder by the pandemic (and thus, experienced more vulnerability). We hypothesize: Hypothesis 3a. The pandemic-induced consumer vulnerability affects specific household spending patterns. We collected data on the intensity of Covid-19 situation in each country. This is important, as prior research indicated that the extent of threat is an important factor contributing to vulnerability states of individuals . The extent of threat is influenced by severity, scope, and psychological distance. Severity refers to the "size" of the threat in terms of potential harm to wellbeing. Scope refers to the "size" of the threat in terms of the number of people, communities, and geographic areas that the threat can or does impact, as well as its duration. Psychological distance refers to how removed or close the threat seems to the person perceiving the threat (Trope & Liberman, 2010) . As such, we consider the number of new cases and deaths in the month that precedes data collection. The numbers are obtained from the website of the WHO Covid-19 Dashboard. 2 Following the WHO, we report number of cases and number of deaths per one million population. We also report economic prosperity measured as U.S.D. GDP per capita (obtained from the website of the World Bank 3 ). The details are presented in Table 1 . Table 1 shows that the highest number of cases per million population is found in the United States, while the highest number of deaths per million population is in the United Kingdom. As expected, the highest GDP per capital is the in the United States, followed by the UK; there is a considerable gap in income between these two countries and the other two countries, South Africa and Mexico. The questionnaire was designed in accordance with the underlying theories and the relevant variables of interest. When possible, constructs were measured using previously validated scales. In addition, we adopted questions from credible sources such as the House- Participation was restricted to individuals living in each specific country as a permanent resident or citizen and those who were at least 18 years old. To further ensure reliability of responses, participation was restricted to respondents who are one of the primary financial decision makers in their household (see Alhenawi & Elkhal, 2013; Campbell, 2006 To reduce common method bias, we followed Podsakoff et al. (2003) recommendations. First, the measures of predictor and criterion variables were placed throughout the survey and incorporated with other instrument materials. For instance, measures of personality and vulnerability were placed in two different sections of the questionnaire. Second, measurement items were mainly borrowed from previously validated scales and carefully adapted and improved to fit the specific context of the study. Third, respondent anonymity and confidentiality were assured. However, given the fact that data were collected using the same measurement method, we checked for common method bias before hypotheses testing. To that end, a post-hoc evaluation of common method bias, Harman's one-factor (or single-factor) test, was performed by loading all metric variables in the study into an EFA and conducting an unrotated factor solution. EFA generated five factors, explaining 54% of variance and rejected the prospect that one single or general factor responsible for the majority of covariance among the measures (Podsakoff et al., 2003) . In fact, a forced one-factor EFA explained only 21% of variance, indicating that common method bias was not present. Moreover, existing literature has established that the nonrespondents sometimes differ systematically from the respondents in attitudes, behaviors, personalities, motivations, demographics, and/or psychographics, in which any or all of which might affect the results of the study (Armstrong & Overton, 1977; Malhotra et al., 2006) . We evaluated the possibility of non-response bias by comparing the responses of early versus late respondents. Responses to the constructs of interest and demographic variables were compared using t-tests to compare the late versus early respondents, where applicable. No statistically significant difference was found between the two groups (p > .1 for all comparisons), indicating that nonresponse bias was not a concern. We controlled for the demographic and financial characteristics that have been shown in previous literature as determinants of households financial and consumption decisions (e.g., Sherraden, 2013; Xiao & Porto, 2017; Yazdanparast & Alhenawi, 2017) . Risk tolerance is the ability to handle risk, a characteristic that varies considerably among individuals and plays an important role in shaping their decisions (Grable & Lytton, 1999) . Individuals' risk tolerance could impact the level of fears and concerns they experience during the pandemic. Risk tolerance was measured using the well-known investment risk tolerance quiz developed by Grable and Lytton (1999) . This quiz is a reliable and valid measure of risk tolerance (e.g., Gilliam et al., 2010; Larkin et al., 2013) that captures the maximum amount of uncertainty that individuals are willing to accept when making financial and consumption decisions (Grable, 2000) . Participant's responses to the 13 questions included in the quiz were scored and summed up to create a risk tolerance score. The score can take any value between 0 and 43. We also controlled for financial planning, financial knowledge, and household's financial situation, because vulnerability states could be associated with respondents' financial situations and perceptions of their abilities to make financial decisions. Financial planning refers to methods of preparing for future household financial needs in an efficient manner (Altfest, 2004) , which was measured using four items adapted from Parrotta and Johnson (1998) (Cronbach's alpha = .79). Responses were recorded on a 7-point scale (1 = strongly disagree to 7 = strongly agree). Financial knowledge was measured using Knoll and Houts (2012) tool. Respondents answered a short quiz comprised of five multiple-choice questions. We then graded their answers and gave each respondent a score that represents his/her financial knowledge. The score can take any value between 0 and 5. The higher the score, the greater the financial knowledge. Finally, following Lusardi and Mitchell (2008) Risk tolerance is moderate in the sample with little variations across countries. The average financial planning is 4.56 (out of 7) and the average financial knowledge score is 2.24 (out of 5). Financial situation average score is 2.11 (out of 5) and confidence in financial decision-making score is 3.82 (out of 7). All scores are reasonably balanced across countries. Personality traits were measured as in Licata et al., (2003) which were first developed by Mowen (2000) . Respondents were presented with short phrases and asked "how often do you feel/act this way" (responses were reported on 7-point scales anchored by 1 = never to 7 = always). We constructed a consumer vulnerability index to capture individuals' pandemic-induced fears and concerns (adapted from participant with the score of three is someone who believes that because of the pandemic, the local and global economies will be devastated, and his/her household will wind up in an extremely bad financial situation. On the other end, a participant with the score of zero has much more optimistic financial views and little to no fear. We also measured participants' attitude toward their country's health system (1 = very poor and 7 = Excellent). During health crises, the healthcare system becomes a safety net whose strength could lower fears and concerns regarding the pandemic's consequences including mortality rate. Further, prior research has identified physical disabilities and poor health conditions as important and relevant individual factors contributing to vulnerability states (Baker et al., 2005) . As such, we asked participants to rate their own personal health (1 = very poor and 7 = Excellent). Finally, overall satisfaction with life plays a role in one's perceptions and attitudes. Thus, we asked participants to rate their overall satisfaction with life (1 = very dissatisfied and 7 = very satisfied). Appendix A provides a complete list of the measurement items. Sig. 0.000*** 0.000*** 0.000*** 0.000*** 0.000*** 0.000*** Note: Significance codes: "***" 0.001; "**" 0.01; "*" 0.05; "^" 0.1. 5 Unreasonable answers were not allowed. For instance, if the total of spending, saving, and investing was above or below 100%, the respondent was alerted to re-enter valid responses. In the United States, respondents indicated that they will save more, invest less, and spend less. In the United Kingdom, respondents will save and invest more and spend less. In South Africa, respondents' answers indicate that they will save and invest less with no change in spending. In Mexico, respondents anticipate that they will save, invest, and spend less. This finding is noteworthy because it reflects a total sense of powerlessness and lack of control in less developed countries. That is, despite the greater severity of the pandemic in the United States and United Kingdom, those in Mexico and South Africa are more influenced by pandemic induced vulnerability. This may be attributed to the fact that the health and the financial systems in these countries are more fragile. Multivariate regression analysis (ordinary least square model) was employed to test the hypotheses. The results are reported in Table 6 . as mentioned earlier, we also controlled for a set of factors including age, gender, household size, risk tolerance, financial planning, financial knowledge, and financial situation. We first estimated full models with all possible regressors, then we ran concise models with significant coefficients only. We only present the results with the final models (the results for the full models are available upon request from the authors). The findings in Table 6 to devoting more time to improve one's body and physical appearance. Those who score higher on this trait work hard to keep their bodies healthy and in good shape (Mowen, 2000) and have active lifestyles. It is quite expected, therefore, that this trait is positively associated with consumer vulnerability (and specifically, all types of concerns related to the Covid-19 pandemic). Conceivably, the limitations associated with stay-at-home orders are dire threats to one's health and fitness. Agreeable consumers are also more vulnerable showing higher concerns for all areas of vulnerability. Agreeableness is the need to express kindness and sympathy to others (Mowen, 2000) , and thus, it is expected that scoring higher on this trait to be more concerned about the wellbeing of others as well as theirs. Individuals with higher levels of conscientiousness also experience higher vulnerability. This could be due to the fact that these individuals are organized and goal oriented. However, the unprecedent changes and limitations imposed on individuals due to the pandemic has significantly changed normalcy, compromised plans, and shifted goals. Multivariate regression analysis was also employed to assess the rela- Table 7 . In support of H2a, consumer vulnerability is significantly associated with changes in saving, investing, and spending. Consumers who experience a greater sense of vulnerability reported that they intend to save more (regression a) and invest more (regression b). Keeping in mind how the dependent variable in these regressions is constructed (see Table 5 (16) Sig. 0.000*** 0.000*** 0.000*** Note: Significance codes: "***" 0.001; "**" 0.01; "*" 0.05; "^" 0.1. To test H3 and to delve deeper into the effect of consumer vulnerability on spending patterns of consumers, we ran a set of regressions focusing on specific spending categories (see Table 8 (Wang et al., 2020) . The vulnerability is also expected to be associated with higher spending on education, personal care, and transportation. The present research uniquely links research on psychological reactance theory, personality, and consumer vulnerability and contributes to the growing body of research on household financial behavior in the context of Covid-19 pandemic. Household finance has attracted scholars from finance, economics, management, communication, and marketing (e.g., Besharat et al., 2014 Besharat et al., , 2015 Duclos, 2015; Lynch Jr, 2011 and Shefrin & Nicols, 2014) . Extant research has recognized that financial decisions are influenced not only by household's financial profile, but also by decision makers' individual characteristics (Lynch Jr, 2011; Yazdanparast & Alhenawi, 2017) and situational/ environmental conditions where they reside (Xu et al., 2017; Zhao, 2020 (16) Sig. 0.000*** 0.000*** 0.000*** 0.001*** 0.000*** Note: Significance codes: "***" 0.001; "**" 0.01; "*" 0.05; "^" 0.1, "." 0. The results contribute to the newly emerging branch of literature concerning the impact of large-scale catastrophes, like the pandemic, on consumer decisions (Yue et al., 2020) and is the first to provide empirical evidence on the role of vulnerability as the factor impacting spending decisions. Understanding how individual differences shape responses to major public health events such as pandemics has the potential to inform public policy through the identification of at-risk individuals and the provision of targeted guidance (Siritzky et al., 2020 consumers to focus on product/services/experiences that give them a sense of freedom, joy, and extravagance to compensate for the lost opportunities during the pandemic. This is line with Norris and Williams (2016) who refer to consumers' perception of necessity as a psychological phenomenon associated with insecurities. Moreover, the findings contribute to psychological reactance theory (Rosenberg & Siegel, 2018) , revealing that changes in behavior in response to threats could extend to redefining necessities. Moreover, advertisers and marketers are encouraged to shape their messaging in line with these findings, highlighting the new necessities and the sense of control (as opposed to containment) that consumers could gain through them. The would be worthwhile to explore these shifts through qualitative research to uncover the psychological motives behind the identified changes in spending patterns among consumers who are most vulnerable. Finally, our data were collected during the pandemic. It would be worthwhile to re-examine the findings with a longitudinal approach and re-explore households' financial behaviors once the pandemic is officially over. There is no conflict of interest. The data that support the findings of this study are available from the corresponding author upon reasonable request. https://orcid.org/0000-0001-7228-7862 government bonds are relatively safe. Most of your investment assets are now in high-interest government bonds. What would you do? • Hold the bonds • Sell the bonds, put half the proceeds into money market accounts (savings accounts), and the other half into hard assets • Sell the bonds and put the total proceeds into hard assets • Sell the bonds, put all the money into hard assets, and borrow additional money to buy more Given the best and worst-case returns of the four investment choices below, which would you prefer? • $200 gain best case; $0 loss worst case • $800 gain best case; $200 loss worst case • $2600 gain best case; $800 loss worst case • $4800 gain best case; $2400 loss worst case In addition to whatever you own, you have been given $1000. You are now asked to choose between two alternatives. Please indicate which you would choose. • A sure gain of $500 • A 50% chance to gain $1000 and a 50% chance to gain nothing In addition to whatever you own, you have been given $2000. You are now asked to choose between two alternatives. Please indicate which you would choose. • A sure loss of $500 • A 50% chance to lose $1000 and a 50% chance to lose nothing Suppose a relative left you an inheritance of $100,000, stipulating in the will that you invest ALL the money in ONE of the following choices. Which one would you select? • A savings account or money market fund • A mutual fund that owns stocks and bonds • A portfolio of 15 common stocks • Commodities like gold, silver, and oil If you had to invest $20,000, which of the following investment choices would you find most appealing? • 60% in low-risk investments 30% in medium-risk investments 10% in high-risk investments • 30% in low-risk investments 40% in medium-risk investments 30% in high-risk investments • 10% in low-risk investments 40% in medium-risk-investments 50% in high-risk investments Your trusted friend and neighbor, an experienced geologist, is putting together a group of investors to fund an exploratory gold mining venture. The venture could pay back 50-100 times the investment if successful. If the mine is a bust, the entire investment is worthless. Your friend estimates the chance of success is only 20%. If you had the money, how much would you invest? • Nothing • One month's salary • Three month's salary • Six month's salary Risk tolerance grading tool (43 total possible points). 13-22 Low-risk taker. 23-33 Moderate risk taker. 34-43 High-risk taker. Financial planning (Parrotta & Johnson, 1998) . Please rate your agreement/disagreement with the following statements (1 = strongly disagree; 7 = strongly agree): • I create financial goals. • I make plans on how to reach my financial goals. • I review my total financial situation on a regular basis • I regularly discuss financial goals with experts in the field of finance Financial knowledge (Knoll & Houts, 2012) . Suppose you had $100 in a savings account and the interest rate was 2% per year. After 5 years how much do you think you would have in the account if you had left the money in the account to grow? • More than $110 • Exactly $110 • Less than $110 • I do not know. Imagine that the interest rate on your saving account was 1% per year and inflation was 2% per year. After 1 year, how much would you be able to buy with the money in this account? • About 2% more • About 1% more • About 1% less • About 2% less • I do not know. If the interest rate rises, what should happen to bond prices? • They will rise • They will fall • They will stay the same • There is no relationship between bond prices and the interest rate • I do not know. Financial literacy of U.S. households: Knowledge vs. long-term financial planning Evolution of research in finance over the last two decades-a topographical view Households' intentions under financial vulnerability conditions: Is it likely for the COVID-19 pandemic to leave a permanent scar? 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The contagion effects of being named Corona during the COVID-19 pandemic Digital transition by COVID-19 pandemic? The German food online retail A review of resource theories and their implications for understanding consumer behavior The psychology of investment behavior: (De) biasing financial decision-making one graph at a time Different uses of Bronfenbrenner's ecological theory in public mental health research: What is their value for guiding public mental health policy and practice? 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Emerging Markets Finance and Trade On the trait antecedents and outcomes of service worker job resourcefulness: A hierarchical model approach The relationship of consumer personality trait, brand personality and brand loyalty: An empirical study of toys and video games buyers Personality and perceived stress during COVID-19 pandemic: Testing the mediating role of perceived threat and efficacy Pandemic, mobile payment, and household consumption: Micro-evidence from China. Emerging Markets Finance and Trade Mental symptoms in different health professionals during the SARS attack: A follow-up study Planning and financial literacy: How do women fare? Introduction to the journal of marketing research special interdisciplinary issue on consumer financial decision making Essentials of marketing research: An applied orientation How the cryptocurrency market has performed during COVID 19? 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Retailers' ups and downs during the COVID-19 outbreak The impact of financial attitudes and knowledge on financial management and satisfaction of recently married individuals Immigrant consumers: Marketing and public policy considerations in the global economy Personality and credit card misuse among college students: The mediating role of impulsiveness Common method biases in behavioral research: A critical review of the literature and recommended remedies A consumer values orientation for materialism and its measurement: Scale development and validation A 50-year review of psychological reactance theory: Do not read this article Household strategies to cope with the economic costs of illness COVID-19 pandemic, oil prices, stock market, geopolitical risk and policy uncertainty nexus in the US economy: Fresh evidence from the wavelet-based approach Credit card behavior, financial styles, and heuristics Building blocks of financial capability Impact of Covid-19 on consumer behavior: Will the old habits return or die The role of personality in shaping pandemic response: Systemic sociopolitical factors drive country differences Individual psychological responses to the SARS-CoV-2 pandemic: Different clusters and their relation to risk-reducing behavior Consumer behavior in crisis situations Here's how some of the countries worst hit by coronavirus are dealing with shortages of protective equipment for healthcare workers Construal-level theory of psychological distance Personality and stress The pauper wears Prada? How debt stress promotes luxury consumption Financial education and financial satisfaction: Financial literacy, behavior, and capability as mediators Genetic and environmental influences on household financial distress Personality and borrowing behavior: An examination of the role of need for material resources and need for arousal traits on household's borrowing decisions Household financial decision making amidst the COVID-19 pandemic. Emerging Markets Finance and Trade Effect of air pollution on household insurance purchases. Evidence from China household finance survey data Yasser Alhenawi is an Associate Professor of Finance and the Director of the MBA program at Ajman University College of Business. He has long practical and academic experience in the United States. His areas of specialty are Corporate Finance and Investments. His research interests are mergers and acquisitions, asset pricing models, Islamic finance, and personal finance. He has presented in major finance conferences Alhenawi is a recipient of several awards including the Doctoral Crescent City Scholarship, the Toussaint Hocevar Outstanding Doctoral Student Award, and the Dean's Teaching and Research Awards APPENDIX A Measurement Items Consumer vulnerability (adapted from Cicirelli Please rate your agreement/disagreement with the following statements (1 = strongly disagree; 7 = strongly agree • I am afraid of the impact of Covid-19 on my personal health • I am afraid of the impact of Covid-19 on my loved ones' health • I am afraid of the impact of Covid-19 on my professional life • I am afraid of the impact of Covid-19 on my social life • I have felt that death is closer to me than ever before due to the COVID-19 pandemic. Pandemic related perceptions and attitudes (developed for the present research in line with Baker et al After Covid-19, the world economy will collapse. It will be a disaster that lasts for long years After Covid-19, the world economy will be in recession for 1-2 years. It will recover afterwards After Covid-19, the world economy will slow down for a short period of time After Covid-19, the economy of my country will collapse. It will be a disaster that lasts for long years After Covid-19, the economy of my country will be in recession for 1-2 years After Covid-19, the economy of my country will slow down for a short period of time • I and my family will be in severe financial distress. I am extremely concerned • I and my family will have some financial difficulties. But we will be fine • I and my family will be just fine. (0) How do you rate your general health condition? (1 = very poor 7 = excellent) How do you rate the health system in your country? (1 = very poor; 7 = excellent) Personality traits Covid-19 induced changes in spending (adapted from the personal finance survey administered by the Bureau of Labor Statistics at the US Department of Labor) In the following questions, we would like to know how the Covid-19 pandemic is affecting your spending patterns (Before Covid-19/ Post Covid-19; 0% • % of your spent income that goes to personal care products (makeup, creams, hair products • % of your spent income that goes to luxury items such as fancy cars, watches, jewelry Risk tolerance In general, how would your best friend describe you as a risk taker? You are on a TV game show and can choose one of the following You have just finished saving for a "once-in-a-lifetime" vaca Deposit it in a bank account, money market account, or an insured deposit instrument risk" which of the following words comes to mind first? this scenario. Some experts are predicting prices of assets such as gold, jewels, collectibles, and real estate (hard assets) to increase in value Normally, which asset displays the highest fluctuations over time? After age 70 1/2, you have to withdraw at least some money are liable for the company's debt • you have a say in the day-to-day running of the company • I do not know An annuity is a financial product that pays a lump sum when A 15-year mortgage typically requires higher monthly payments Financial Situation (adapted from Lusardi & Mitchell • How would you describe your own personal financial situation? • How confident are you that you are making the best choices for how to manage your money, savings, and investments? (1 = very confident