How Will Psychology Affect The Economy Post-Lockdown?

Social distancing and self-isolation policies have impacted the mental health of many around the world. The psychological implications of lockdown can answer some questions for the economy.

Photo Credit: Delicious.

Social distancing and self-isolation have been necessary measures to slow the spread of Covid-19. With restaurants, public parks and work offices being closed, Australia has handled the pandemic relatively well, as lockdown restrictions are slowly being eased. Some might say we’ve overcome the worst of the virus.

However, it goes without saying that the return to normal life won’t exactly be smooth, and the impact of the virus and social distancing policies isn’t that simple. Experts have warned about the mental health of many being affected as a result of the crisis, which in turn could be a problem for the economy.

Social connection is a fundamental need for humans, so it’s no help that our loneliness has been increased. For many, stress and negative thinking have also been side effects as they struggle to cope with social isolation. So, with lockdown restrictions being lifted, it’s safe to say the return to normal will go differently for everybody. Different people will likely respond to the changes in ways that they feel necessary, safe or comfortable with. And yes, this means many will choose not to trust the idea of going out just yet, regardless of restrictions being lifted.

The decisions that individuals will make post-lockdown raise many questions for the economy, but psychologists have made some predictions. In the past, Daniel Kahneman and Amos Tversky have indicated that humans overestimate the likelihood of rare events, as people generally have poor judgement of probability. In saying this, it’s assumed that most people will choose to play it safe in a situation like Covid-19, due to the supposed potential of contracting the virus.

There is also the fact that while many people will intend to stay inside, this doesn’t necessarily mean they will. When the time comes, many are also likely to change their mind and adapt back to normal life.

Psychologist Kimberley Norris at the University of Tasmania has told Daily Mail Australia that Australia is now entering the fourth emotional stage of lockdown. This is the ‘reunion’ stage, which she indicates that some will handle better than others. The current reunion stage has come after the third ‘resentment’ stage, and will be followed by the fifth and final ‘reintegration’ stage. In the reintegration stage, things will go back to normal, with people returning to their workplaces, restaurants reopening, and international travel resuming. About life post-lockdown, Norris said:

‘There’s a degree of apprehension about how life will look, because the fact is, it won’t be the same as it used to be. It’s not a case of simply picking up where we left off.’

So as for the economy, it relies on the general decisions of individuals, as well as their financial decisions. The choice to keep one’s distance will obviously affect one’s urge to spend money, so to navigate the global economy, a little understanding of the psychology behind peoples’ decisions and way of thinking would be beneficial. It’s fair to say that it won’t be until the world is confident in the outcome of our collective efforts that the economy can recover.

Subscribe to FIB’s Weekly Alchemy Report for your weekly dose of music, fashion and pop culture news!