Cover Story

Since September, hundreds of thousands of Americans have lost their retirement savings, jobs and even their homes. Given these hard realities, how is the economic downturn affecting the nation's mental health? Research by psychologists and others are offering some clues.

Overall, studies show that people of all economic and demographic stripes react similarly to unexpected economic deprivation, but that those prone to depression may suffer the most. Research also suggests that coping mechanisms, such as putting the family first, as well as tested interventions that help people find jobs and avoid depression, can help people weather financial setbacks and come out the stronger for it.

Perhaps the most telling data come from a longitudinal study of people affected by the farm crisis of the 1980s, when thousands of American families lost their farms or farm-related jobs. The Iowa Youth and Families Project has tracked 500 Americans every year since 1989 to get a long-term view of how economic strife affects individuals and families.

At the beginning of the study, Rand Conger, PhD, then at Iowa State University and now a distinguished professor of psychology, human development and family studies at the University of California, Davis, and Glen H. Elder Jr., PhD, research professor of psychology and sociology at the University of North Carolina at Chapel Hill, surveyed and videotaped the then-young people, their parents and their siblings.

"We discovered that when families faced these huge economic difficulties, a standard process occurred," says Conger.

Conger and colleagues first described the process in an empirically based model called the "family economic stress model" in a 1992 article in Child Development (Vol. 63, No. 3), as well as in the book "Families in Troubled Times: Adapting to Change in Rural America" (Aldine de Gruyter, 1994).

In essence they found that families enter a complex, downward spiral. As incomes fall, families experience such pressure as being unable to pay their bills and having to scrimp on food, utilities and health care. Some consider moving in with other families or relocating to look for work.

As these stressors mount, so does parents' emotional distress, the team found.

"This distress can take a lot of different forms: depression, heightened anxiety, irritability and anger, and alienation," Conger notes. "When that happens, it creates real havoc in family relationships."

Mothers who become depressed may snap at or withdraw from their children, for example. Fathers' irritability may erode communication with their wives, which in turn heightens children's anxiety.

The researchers are now examining how these factors have affected the original study participants, now in their early 30s. Compared with rural peers whose families did not suffer major economic hardships, young people whose families were financially hit fared worse socially, academically and psychologically—again, in a logical progression, the team found. For instance, a lack of parental support led many youngsters to flounder in schools and in some cases act out behaviorally. In turn, their lack of academic success led them to choose less rewarding and lucrative jobs than peers.

Conger and others have since replicated these findings with a wide variety of samples, including African-American families in rural and urban areas, Mexican-American families in California, and Finnish families, all reviewed in a 2007 article in the Annual Review of Psychology (Vol. 58).

"The process through which family stresses influence families and eventually their children seems to hold up nationally and internationally with many different ethnicities," Conger says.

In a similar vein, University of Michigan psychologist Richard H. Price, PhD, and colleagues have examined how job loss affects individuals. In a 2002 article in the Journal of Occupational Health Psychology (Vol. 7, No. 4), the team found that across all demographic and socioeconomic groups, job loss triggers what Price calls a "cascade of stressors," which in turn spurs on anxiety, depression and marital conflict.

The fewer buffers people have, such as a second income or strong social support, the worse the impact of these stressors, he has found.

Who hurts most

While financial upheaval appears to affect all people similarly, some people and families fare better or worse than others, researchers are finding.

In videotapes of the rural Iowa families, Conger and colleagues observed that children in families whose parents put family first and continued to communicate despite the hardship fared much better in the short and long term than those who allowed the crisis to fracture them.

Youngsters "weren't terribly bothered by not having a lot of stuff," Conger says. "What bothered them was when their parents became angry and irritable and withdrawn."

Similarly, children whose parents maintained strong community ties did much better over time than those who were not as embedded in their communities, says Elder, Conger's research colleague.

"Kids whose parents were connected to church, school and civic organizations lived their lives the same way," he says. "Those involvements really predicted what they were going to do in their lives and how successful they would be."

Individual factors are likely to influence people's coping abilities as well, other researchers find. In a range of epidemiological and intervention studies, for instance, Price and colleagues have found that people who are more prone to depression are at least twice as likely to have mental problems in the face of economic stressors than others, for example.

George Washington University psychologist George Howe, PhD, who studies job loss, posits that people who blame themselves for their situation and have insecure attachment styles are most likely to become depressed.

"People's characteristics and how they interpret the situation may be more important than the job loss itself," Howe surmises. "Job loss simply means that I don't have a job in this moment. The real stressor is our projections into the future about what that means."

Preventing depression, finding jobs

In line with that concept, Price and colleagues began an intervention in 1981 that seems to work especially well for job-seekers who are prone to depression. Called JOBS, the program teaches trainers to help unemployed job seekers gain the practical skills and confidence they need to find employment, Price explains.

Via a five-day workshop, participants learn job-search strategies, practice interviewing skills and engage in problem-solving activities that help them cope with job-seeking stresses and setbacks.

"The most important components are those that empower participants to take risks and rethink themselves," says Price.

In two major randomized trials in the United States and one in Finland, the researchers have shown that those who participated in the program got jobs faster, secured higher paying jobs, and were less prone to distress and depression than those who received a script, a recording and a manual of the program. Several journal articles detail this work, including a 1992 article in the Journal of Health and Social Behavior (Vol. 33, No. 2) and a 1995 article in the American Journal of Community Psychology (Vol. 23, No. 1). The Finnish work is described in a 2002 study in the Journal of Occupational Health Psychology (Vol. 7, No. 1).

"People go from being depressed and scared to being confident and going out and engaging in effective job searches," Price says.

JOBS—named by the Substance Abuse and Mental Health Services Administration as one of its Model Programs—has been implemented in a number of U.S. cities, including Detroit, Los Angeles and Baltimore, as well as overseas. It is an official government program in Finland and is being run in cities in China, Korea, Ireland, Israel and the Netherlands. In all, more than 10,000 people have gone through the JOBS program.

In Price's view, prevention efforts like this are key to helping people cope with today's crisis in part because it will affect so many people.

"There will never be enough psychologists, psychiatrists and lay treatment people to deal with all of the casualties we have," he believes. "So, we have got to help people cope more effectively and learn to support their own lives."

The same is true with helping families prevent the potential emotional blowups that long-term financial hardship can trigger, Conger says.

"It's really important for people to get educated on the effects because these things can really sneak up on you," he says. "Your economic situation is bad, you're having these problems in your marriage, and a lot of people don't realize these things are related to one another. If people can come to understand what can happen as a result of these problems, they'll be better equipped to cope with them."

Tori DeAngelis is a writer in Syracuse, N.Y.

Further reading

For more information on the Iowa Youth and Families Project, go to

For more information on the JOBS program, go to