The Stress-Economy Connection

Stress is a natural response that we all have when our environment starts becoming challenging or threatening. We instinctively react to the changes and their potential effects on us. This in itself is beneficial when we have a good dose of it(stress). Because it moves us to take action and modify course.

The economy is in a constant influx and outflux. The speed at which this happens varies on multiple factors. To many people, the economy is currently out of shape. More like shrinking in shape. Recession has being a trending term in the past twelve months and one of the accepted views is that we're either heading towards it or we're already in it. Which is which?

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Stress And The Economy

There's isn't strictly any connection with stress and the economy other than the observation that economic downturn increases the stress levels of people. And this could further tank the economy.

We can tell that when people are stressed, their productivity at work drops. This can lead to a decrease in economic output from the businesses that these people work at. Assuming that this continues, less economic activity will be generated from the business further reducing the inflow and outflow of capital.

Outside of business, people who are stressed about their finances may shop less or buy cheaper products to save money for the foreseeable future. And with inflation out of the proverbial box, saving money is another financial challenge.

On the other way round, when there's economic growth and activity in plenty. People and businesses have more resources and opportunities at their disposal. And the level of stress drops considerably during that time. I don't want to say that our stress levels is dependent on the economic condition we're living in but it does feel that way. Maybe there's a connection after all.

Behavioral Change

Our buying and selling behavior is influenced by our stress levels and the economic conditions.

Apart from reducing our buying activity, we also withdraw and become passive in response to stress. I wear my doom and gloom hat whenever I visit the market and hear all the stories revolving around the topic of price increase.

This changes my perception, also influencing my decision-making process. After hearing their stories, I dare not negotiate on the price of an item lest they jump on me. Now, I'm less motivated to process information and evaluate other alternatives when it comes to the price of an item.

Another interesting part is how it affects our satisfaction and loyalty. We tend to have lower expectations and a high tolerance for dissatisfaction in stressful times. We simply put up with it.

We may also be more sensitive to feedback and complaints, and less likely to repeat purchase or recommend products and services.

In Closing

People behave more irrationally under stress. And when it comes to finances, its implications can be manifold.

It sounds simple enough to just breathe and think clearly in order to not make things worse. But already being off balance prevents that. Are we in a recession?


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