Coping with Covid-19 in rural India: Did financial strategies help to maintain wellbeing?

Abstract

This thesis examines the direct impact of the Covid-19 pandemic on psychological wellbeing and explores the mediating role of financial coping strategies for this association. Using four waves of representative panel data, collected in 2018, 2020 and 2021 from 2 997 households living across 294 villages in the state of Odisha, India, we find that stress increased whilst depression decreased, resulting in psychological wellbeing being unchanged during the pandemic. This may be because livelihoods were not affected immediately and accumulated stress tends to result in depression. Using only the last survey wave, we find that adopting financial coping strategies was associated with lower stress as the pandemic intensified, whilst receiving instalments from the state government was associated with higher depression during the pandemic. These findings highlight the importance of financial coping strategies as complements to financial state government support. However, as the choice of coping strategy is highly endogenous, these findings should be interpreted with caution.