Economic Instability and Your Psychology

Current situation and psychological Effects

The persistance of gross economic misconduct and mismanagement can lead to longterm psychological effects on a population, including chronic stress, learned helplessness, depression, anxiety, loss of trust in institutions, leading to a survival first mindset and generational trauma. These effects alter individual wellbeing and collective mental health, often becoming entrenched even after economic recovery. This mismanagement and instability causes inadequacies in the lives of people conditioning them to expect less, dream less, make short term plans as a result of conflicts and economic fluctuations that interrupt peace and national security. Economic mismanagement does not just damage markets it breaks minds (Wagland & Taylor, 2021). 

Economic instability and mismangement psychologically preconditions its survivors to develop deepseated internalized beliefs that restrict how they see themselves, their abilities, and what is possible. These are not just personal flaws they are socially conditioned survival responses to broken systems. It shapes how people see themselves, each other, and the future. Living in a financially limited country can impact the political or social atmosphere to an extent of projecting a scarcity mindset unto its citizens.

The scarcity mindset refers to a mental framework dominated by the perception of lack whether it is a lack of money, time, food, opportunities, love, or stability. When people feel they do not have enough of something essential, their focus narrows intensely on that thing, often at the cost of long-term planning, rational decision making, or broader thinking. So next time when you let yourself believe something is not possible, ask yourself if that is true or if you have let temporary situations influence what you believe is possible. 

Some of such limiting beliefs include but not limited to:

“No matter what I do, nothing will change.” FALSE! change is infact the only constant thing in this universe and you can decide to let things happen to you or you can choose what direction.

“Success is only for the corrupt or connected”. Another false statement; success is actually for those who have sufficiently wanted it. sufficiently wanting something requires consistent efforts and diligence towards achieving set goals. 

“I am not capable / worthy”. You are only as capable or worthy as you decide, you decide your identity and how the rest of the world perceives you.

“There is never enough”. There is more than enough my darling, you do not always have to wait to be given. If there is not enough, make more, find more, choose to see and receive abundance.

"Planning is useless". False! if you fail to plan, you plan to fail; this applies to several situatoins and particularly about your life and decisions you make. Also remember that an object in motion stays in motion unless acted upon by an external object. Unless you enforce change in the direction you want it, it will either remain that way or workout in opposite directions. Instead, choose your direction and set your pace.

“The system is broken, so I might as well break the rules too”. This is false, keep yourself accountable for your actions, a system is set through continued actions over time. Learn to exude the energy you wish to experience in the world.

These beliefs and psychological limitations are not inherent traits but conditioned responses to repeated insecurity, injustice, instability, and scarcity. And while they are understandable, they also form mental cages that limit growth, risktaking, creativity, and healing, even when conditions improve.

 

Conclusion

We are only as limited as we let ourselves believe despite economic situations, widespread awareness of the problem mitigates the extent to which it affects us as we seek a way out. Even long after such crisis ends, the psychological scars remain unless there is deep healing, trustbuilding, and reform. Nations around the world have gone through hard times, instability and insecurity but with awareness, consistently dedicated and deliberate efforts were able to rise above it and make positive changes.

 

 

 

Read Further

Haushofer, J., & Fehr, E. (2014). On the psychology of poverty. Science, 344(6186), 862–867. https://doi.org/10.1126/science.1232491.

Lund, C., Breen, A., Flisher, A. J., Kakuma, R., Corrigall, J., Joska, J. A., ... & Patel, V. (2010). Poverty and common mental disorders in low and middle income countries: A systematic review. Social Science & Medicine, 71(3), 517–528.

Richardson, T., Elliott, P., & Roberts, R. (2013). The relationship between personal unsecured debt and mental and physical health: A systematic review and meta-analysis. Clinical Psychology Review, 33(8), 1148–1162. https://doi.org/10.1016/j.cpr.2013.08.009.

Sokol, M. (2023). Financial chains and the uneven geographies of financialisation: Crisis, inequality and the power of finance. Cambridge Journal of Regions, Economy and Society, 16(1), 1–18. https://doi.org/10.1093/cjres/rsac038.

Wagland, S. P., & Taylor, S. (2021). Financial capability and mental health: A longitudinal analysis. Social Science & Medicine, 287, 114353. https://doi.org/10.1016/j.socscimed.2021.114353.

Zhou, M., Wang, J., & Haisken-DeNew, J. P. (2024). Financial strain and mental health: The mediating role of sleep quality. Journal of Health Economics, 88, 102783. https://doi.org/10.1016/j.jhealeco.2023.102783