Nat Kelly Nat Kelly28 February 2023 Open Science
Recessions and mental health

How Recessions Impact Mental Health

Economic recessions affect many important areas of people’s lives – housing, employment, cost of living, etc. It’s no surprise, then, that an abundance of research has shown that they have hugely negative effects on mental health. The stress brought about by unemployment and the lack of social security significantly contributes to the increase in suicide rates and incidence of self-harm during recessions. This is also exacerbated by the fact that many countries’ mental health services are drastically underfunded.

An MDPI study, The Impact of Economic Recessions on Depression, Anxiety, and Trauma-Related Disorders and Illness Outcomes—A Scoping Review, assesses the impact of recessions on mental health and wellbeing across the globe. Specifically, it considers four mental health disorders – depression, anxiety, trauma, and stress – and two illness outcomes – self-harm and suicide.

What is a recession?

A recession is a period of economic decline. Generally, they are characterized by two consecutive quarters where gross national product (GNP) falls by 1.5% or more. Also, unemployment rates increase by two percentage points to at least 6%. This rise in unemployment is seen across the majority of industries – approximately three-quarters.

What causes recessions?

Recessions are caused by an array of factors, with each one having unique conditions under which it is formed. Common causes include:

  • Inflation: This is where the prices of a country’s goods and services continually increase over a period of time. This leads to a decrease in the purchase of products by the population, putting many below the poverty line. This forces companies to reduce production, leading to mass layoffs and thus high unemployment rates.
  • Asset bubble bursting: A bubble is a circumstance where the price of a product significantly exceeds its actual value. They can occur for almost anything – a new technology, agricultural products, loans, etc. Generally, they are created when conditions are perfect for a specific product to thrive, leading to the price and production increasing as more people buy it. This inflates its value drastically. This results in investors selling their shares, as they fear a burst, meaning the price of the product plummets and the market crashes.
  • Sudden economic shocks: These are spontaneous events that have a huge impact on the economy. They affect the supply or demand of a product or service, with far-reaching effects on the economy due to the interconnectedness of different markets. The coronavirus pandemic and the increasing price of oil are examples of recent economic shocks.

Study description

With the serious global recession brought on by the COVID-19 pandemic, the aim of this study is to outline and assess the breadth of research on the impact of recessions on mental health.

The authors conducted a scoping review for the period 2008-2020, analyzing data from 127 articles after screening. Only articles from member countries of the Organisation for Economic Co-operation and Development (OECD) were included.


This study highlights a significant relationship between economic recessions and the increase in depression, anxiety, self-harm, and suicide.


Unemployment and precarious employment were shown to be huge contributors to the increase in depressive symptoms seen after the 2008 global financial crisis. The relationship between employment status and depression seems to be stronger for men than it is for women. Housing insecurity was also a huge factor, with cases of major depressive disorder being associated with difficulties in paying mortgage repayments, foreclosures, etc.


Interestingly, levels of anxiety were stable or in decline across the general adult population in the USA and Canada during the 2008 financial crisis and 2015 oil recession. But, they were shown to be significantly increased in workers, with huge increases in the prescription of anti-anxiety medication. It was found that people who felt their employment was insecure were 21.2% more likely to experience anxiety attacks.

Self-harm and suicide

In Ireland, following the 2008 financial crisis, cases of self-harm were much higher than during non-recession periods. It is thought that 5029 cases for men and 3833 for women were as a result of the recession. Also, of 48 studies on suicide mortality rates, 45 found that rates of suicide were increased during recessions.

Suggestions for policymakers

The authors of this review suggest that governments can take effective measures to reduce the risk of suicide and prevent poor mental health. They call for investment in labor programs and unemployment protection as security measures when recessions hit. Also, it is shown that social support is hugely protective against anxiety and depression during recessions. Thus, low-cost interventions should be implemented, such as encouraging emotional support at the community and family levels, as well as providing online services for mental health support such as Internet-delivered cognitive behavioral therapy.

Future research on mental health in the context of a recession

This study highlights the dearth of research on trauma-related conditions and special populations – e.g., children – in this context. There was also little to no research on Asian, Central and South American, and African nations. More work should be carried out to assess the impact on these populations and nations.

Also, studies looking to assess low-cost interventions for mental health issues experienced during recessions are encouraged.