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Healthy (and Less Healthy) Responses to the Economic Situation

12Mar 2009

As a psychologist, I naturally find myself observing people’s behavior — their choices, what they are saying, and how they are feeling.  And this is the case now, in the midst of the difficult economic times in which we find ourselves (I am consciously choosing not to use the term “financial crisis”.)

There are three core aspects to any situation that involves human perception and response:

  • Reality.  What actually “is” — the facts of the situation. (Using a non-related example: the temperature — which is about 30 degrees F. on a mid March day.)
  • Perceptions. How people perceive, view, and interpret the facts.  (Regarding the weather, it seems excessively cold and wintery for this time of year; especially since it was 70 degrees for a few days last week.)
  • Reactions.  How people respond both to the reality and their perceptions of the situation — their opinions, feelings, and behaviors. (Many people are somewhat irritable, complaining of the cold [because “it should be warmer”], some people are going on trips to warmer climates.)

These issues are relevant to the current economic challenges we are facing.  First, we must ask ourselves: What are the facts?  Some include:  a) real estate values have dropped significantly (30%-50%) in the past six months;  b) stock values have also decreased significantly (40%-50%) and are the lowest level they have been in decades;  c) as a result of these two factors, individuals’ and families’ financial worth is far lower than it was this time last year;  d) numerous companies are laying off workers and unemployment is at 8%, also a high mark for recent years;  e) financial institutions and the credit market are stressed;  f) the Federal government is taking significant steps to try to rectify the situation.

The next two areas are where we as individuals, families, businesses, communities and a nation, can get “tripped up”, if we are not careful.

Two unhealthy responses to difficult situations include:

  1. Ignoring the facts.  As Jim Collins emphasized in Good to Great, successful companies (and by inference, individuals, families, et al) need to brutally face the facts of reality.  Acting like “what is” really “isn’t”, doesn’t help.  Some people call this denial.
  2. Panicking and making emotionally-based decisions.  Yes, these are difficult times.  Is it a “crisis”?  Maybe.  Time will tell.  But becoming frantic, making quick not-well-thought-through decisions is not a good strategy.  (Note that some people become paralyzed when they panic and “do nothing” — which may not be a helpful strategy either.)

So what are healthier ways to respond to the current situation (“healthier” as defined functionally by thoughts and actions that lead to survival and better functioning in the future):

  • Pay attention to important facts, but don’t become overwhelmed with more information than you can process (and filter out extraneous “noise” — other people’s thoughts, feelings & reactions).  It is important for each of us to understand what is going on in our country, communities, and the world.  But Americans have become ‘news junkies’ and taken in more information than we can possibly manage, process, and respond to — especially on talk radio and cable TV news channels.  The basic facts are there and that is largely what we need to know.
  • Make reasoned decisions that lower your exposure to the risks that you can manage.  Each of us can make some individual decisions that can help us manage our own risks — whether at an individual, family, or business level.  Steps like managing expenses more closely, not going into unnecessary debt, and taking advantage of purchasing opportunities due to the economic situation — all are reasonable steps.
  • Be thankful and learn to be content.  Most of us are still in situations where we have jobs and income, a place to live, food on the table, and live in safety (I do not want to minimize those who are in more difficult circumstances, but these situations are still true for most Americans.) If this is true for you, be thankful.  There are billions in the world less fortunate.  Also, learn to be content with what you have — your job, your car, your life circumstances — versus focusing on what you wish was different or “what should have been.”
  • Be gracious and generous to others.  Most of us know individuals, families and businesses who are struggling currently.  A trap that some fall into is to be judgmental of others — thinking that they are in their current circumstance because “they didn’t …” or “they shouldn’t have …”.  In some cases that may be true.  But in most cases, people are where they are due to many circumstances out of their control.  [In either case, how does it help them to judge them?]  We now have the opportunity to be warm, caring and supportive — and potentially to be generous in some way (maybe with our time, maybe by connecting them with a potential employer).
  • Manage your own stress effectively.  Try to limit your exposure to negative spins on the current facts — anger, resentment and bitterness don’t lead to a healthy life.  Manage your own thoughts, worries and anxieties.  Exercise.  Sleep. Take time for re-energizing yourself.  Spend time with friends and family.  (All things that we know we should do.)

Just as many individuals recount some of the more difficult periods in their lives as the most rich and rewarding times, so we also have the opportunity to come through these current circumstances as stronger individuals, families, communities, and possibly, a stronger healthier nation.

So, “Carpe diem!” (along with grace and peace in your daily life and relationships).

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