"The economic challenges are all about psychology."
— Larry Summers, National Economic Council Director
"What this country needs is economic psychotherapy."
— George Will, political writer
The economic downturn that started in 2008 has created challenges, difficulties and opportunities for our nation and psychologists across the land. While there are real economic problems including serious hardships for many families, as evidenced by job, stock market and housing losses, the repeated message from many experts is that a major contributing factor to the economic downturn is a lack of consumer confidence about the economy.
What can psychology do to turn consumer confidence around? The Consumer Research Center defines consumer confidence as a measure of the level of optimism consumers have about the performance of the economy. A monthly survey of about 5,000 households is used to look at confidence in current conditions and the future. When consumer confidence is low, people spend less money and borrow less. This contributes to a spiraling negative effect throughout the land. While many businesses and individuals are flush with cash, they will not spend it, hire new people or buy new equipment or household products because they are uncertain about what to expect in the future.
According to many, the crux of this is a fear of uncertainty, and Wall Street hates uncertainty. Many years of psychological research indicate that humans have a difficult time dealing with uncertainty and a sense of being out of control in their lives. These emotions are associated with increases in health and psychological problems. People get into survival mode and start constricting their spending even though their business or individual income is doing well.
Creating a confidence virus. We need to create a confidence virus to spread throughout the land to change the attitudes and behavior of the American public. The Internet and ready access to the media give us a chance to inject an alternative reality and increase consumer confidence. Here are some suggested ways that psychologists can use their expertise to help create a confidence virus:
1. Managing uncertainty. We can help the public learn to embrace the increasing ambiguity of our modern world and manage the uncertainty of change. Clinicians are experts in helping people manage change. When people feel that they have a sense of control and choice, they can better handle the uncertainty of life. This is an excellent time to try new ideas and behaviors that in comfortable times, most people are unwilling to do.
2. Counteracting negative media messages. We constantly hear from the media that we are in the worst economic condition since the Great Depression, yet the data don't support this interpretation. For example, in January, unemployment was 7.2 percent, while it was 25 percent during the Depression. While the current economic problems are indeed serious, it is important to remind people that during the Great Depression, there were no social safety-net programs; now there are. Challenge the doomsday messages and offer more helpful ones. If people get overly upset about the news—tell them to turn it off and focus on what they can do to positively cope with their situations.
3. Developing optimism through the application of positive psychology. As Marty Seligman demonstrated, focusing on individual strengths and what individuals can do to handle situations brings a sense of personal control and increases people's sense of well-being. Optimism can be learned and in many cases, it is a choice about how to view the world. Help the public focus on what they can do and have control over and offer a sense of hope and optimistic interpretation about new opportunities.
I invite you to take this challenge. Help our nation change in a positive direction—spread the confidence virus using your knowledge and skills as a psychologist. Be a powerful force in turning our nation and the world around. As always, contact me anytime via e-mail.