Gambling and Financial Stress

Abstract

In recent years, gambling harm has been considered a significant public health concern due to its increasing socioeconomic costs. Although the adverse effects of gambling have attracted research interest, evidence of its effect on financial stress remains largely anecdotal. This study empirically examines the link between individual problem gambling severity and financial stress using panel data from the household, income and labour dynamics in Australia survey. After addressing endogeneity, we find that problem gambling severity is positively associated with self-reported financial stress. Thus, problem gambling severity tends to increase financial stress. This finding is robust to alternative measures of financial stress and gambling behaviour—whether gambling is measured using the problem gambling severity index, gambling risk statuses, number of gambling activities, or gambling expenditure. The positive effect of gambling on financial stress is largely driven by gambling activities involving scratch cards and poker machines. Although males exhibit higher levels of problem gambling severity, females are more financially stressed than males. Our findings also suggest that gambling widens the gender gap in financial stress. Further analysis reveals that financial resilience mediates the gambling-financial stress relationship. This implies that promoting policies that enhance financial resilience can help to insulate individuals against the effects of gambling on financial stress.