How do state policies shape experiences of household income shocks and mental health during the COVID-19 pandemic?

The tremendous job loss and wage cuts during the COVID-19 pandemic raises concerns about the mental health of the population. The impacts of income shocks on mental health may differ across U.S. states during the pandemic, as states have different policy contexts that likely influence mental health. The present study uses survey data from the Census Bureau's Household Pulse Survey (April–July 2020) to examine whether mental health outcomes vary across U.S. states and to what extent specific state-level contexts moderate the associations between household income shocks and depression (n = 582,440) and anxiety (n = 582,796). We find that the prevalence of depression and anxiety differs across states by household income shock status. For individuals, living in a state with supportive social policies – primarily those related to Medicaid, unemployment insurance, and suspended utility shut offs during the pandemic – weakens the association between household income shocks and mental health. Findings suggest that the lack of a strong federal response to the pandemic alongside the devolution of federal power to states over the past 40 years contributes to inequalities in mental health across states. We provide insight about how specific existing and emergency-related policies can reduce adverse mental health consequences of household income shocks. •Rates of depression, anxiety are greatest for adults experiencing an income shock.•Depression and anxiety vary across states by household income shock status.•Many state policies reduce the mental health consequences of household income shocks.•States' political environments also reduced the consequences of income shocks.