Financial Scarcity, Cognitive Load, Financial Stress, and Household Economic Decision-Making: Experimental Evidence from Urban Ghana

Abstract:

Payday-related liquidity fluctuations may influence household financial decisions through cognitive demands and financial stress. This study examines differences between interviews conducted before and after salary payment among 1,000 lower-paid workers in five Ghanaian metropolitan areas. The field survey combined cognitive tasks, financial-stress measures and incentivised intertemporal and risk-choice tasks. Group comparisons and regression estimates relate payday timing to savings, financial stress, cognitive performance and household planning. In the controlled specifications, the before-payday indicator was associated with lower savings (coefficient −0.531), lower Raven task scores (−0.721), higher financial stress (0.409) and a lower household decision-making index (−0.171). Risk-preference differences were not statistically clear. Contrary to the proposed mediation account, the supplied bootstrap results did not identify significant indirect effects through cognitive load or financial stress: both confidence intervals include zero. These findings point to possible short-term financial pressure around payday, but the evidence should be interpreted cautiously because assignment procedures require verification and some supplied summary statistics are inconsistent. The study contributes Ghanaian evidence on the distinction between financial strain, cognitive measures and observed choices, while identifying the need for better-powered and transparently documented causal designs.