Financial Hardship, Depression, and Self-Esteem: Temporal Analysis Using a Korean Panel Study

Financial hardship influences depression risk, however, the pathway of the effect of financial hardship on depression and the role of self-esteem remain unclear. This study examined whether changes in financial hardship affected depression, and whether self-esteem mediated by this relationship. Data from 99,588 observations of 15,331 individuals were extracted from 10 waves of the Korean Welfare Panel Study. The association between changes in financial hardship and depression was investigated using a generalized estimation equation, and the extent to which these associations were mediated by self-esteem was assessed. The results indicated that changes in financial hardship were associated with depression, with varying magnitude. Experiencing severe financial hardship over two consecutive years (odds ratio [OR]: 3.87, 95% confidence interval [CI]=3.09-4.85) or increased financial hardship over the previous year strongly influenced depression (e.g., OR: 3.88, 95% CI=3.09-4.86 for low financial hardship at t-1 year and high at t year). Self-esteem plays a mediating role in the relationship between changes in financial hardship and depression, where persistent financial hardship is associated with low self-esteem, leading to depression. These findings highlighted the importance of monitoring and intervention for financial hardship and psychological problems to help manage depression.