The Impact of Economic Volatility on Psychological Health in the Context of the COVID-19 Pandemic

When there is inconsistency between abstract subjective identity and concrete objective identity, cognitive dissonance results in identity disruption, which is detrimental to psychological health. It is proposed that stability is not just related with monetary advantages, but also with a variety of other benefits that are essential for the growth, happiness, and sense of identity of individuals. As a result, it is advised to implement social assistance and public welfare programmes to decrease health risks during tumultuous socioeconomic upheavals.

Highlights

• Due to the combination of several debilitating causes, such as unemployment, downsizing of medical and social services, and cuts in public spending, the reduction in economic activity may result in cognitive and emotional disorders.
• Mental health concerns such as depression, substance misuse, especially alcoholism, and suicidal tendencies are more prevalent among those with extreme financial troubles.
• Positive attitudes regarding one’s self-efficacy and success are regarded as a resource that may be exploited as a coping method for minimizing stresses under situations typical of stability.
• A deeper understanding of the psychological dynamics of crises and risks facilitates the development of programmes, welfare policies, and healthcare efforts to aid individuals in coping with catastrophic situations.

The escalating COVID-19 epidemiological and economic crises precipitated significant difficulties with the socioeconomic determinants of mental health. Individuals, their wives, and their relatives face a heightened mental health threat during economic instability (Roy et al., 2021). Lessons from the past, such as the 2008 financial crisis, give insight into prospective issue areas and information about managing risks. First, not all members of society are impacted equally by the crisis; due to the combination of several debilitating causes, such as unemployment, downsizing of medical and social services, and cuts in public spending, the reduction in economic activity may result in cognitive and emotional disorders (Meltzer et al., 2010). All of them, together with employment uncertainty and future uncertainty in general, result in severe mental harm and the onset of uncertainty intolerance-induced depressive-anxiety disorders (Wright et al., 2016). Particular attention should be paid to disadvantaged, stigmatised, and diagnosed persons. Existing ailments may become more severe and persistent throughout the crisis (Cai et al., 2018). This is because many nations are decreasing their investment in medical health insurance services, particularly in the public sector, and these individuals have limited access to important resources and private practice psychotherapy (Moreno et al., 2020).