Cost of living crisis: what research says about the potential psychological impact

Over two thirds – 69% – of low-income private renters in England will be unable to eat and heat their homes at least one day per week because of rising living costs, the UK charity Crisis recently warned.

The poorest 10% of households spend up to three times more of their family budget on food and energy bills as compared to the wealthiest 10%, according to the Resolution Foundation, an independent UK think tank. The Institute for Fiscal Studies estimates that inflation rates for these poorest families could reach over 10% in 2022.

This has obvious practical implications for people’s daily lives. There is a growing body of evidence that suggests that austerity policies are at least partially responsible for life expectancy stalling in England and Wales. But as my research into social inequality and mental distress shows, the psychological impact is just as profound.

How poverty affects wellbeing and mental health

Research has long shown that poverty and destitution cause stress and what psychologists term negative affective states or emotions: fear, anger, disgust and sadness. Experiencing poverty-related stress can limit your attention span. It favours habitual behaviours at the expense of goal-directed ones. In other words, you are more likely to be short-sighted and risk-averse in your decision making.

Further, psychologists talk about “agency” as the subjective sense that you have control over your life and can shape your future. There is considerable evidence that in western cultures which prize individualism, having such a sense of agency is related to better physical and mental health.

It follows that feeling trapped or helpless over the long term will have a highly detrimental effect on your mental health. Research shows that it nearly trebles the chances of being diagnosed with anxiety and depression. Low levels of trust, meanwhile, increase the chance of being diagnosed with depression by nearly 50%. And job insecurity is as damaging for mental health as unemployment.

Lastly, poverty is humiliating. It can stop people from feeling like they matter. It can deny them the sense both that they are valued, as individuals, and that they are adding value to their community. Research shows that prolonged humiliation following a severe loss trebles the chance of being diagnosed with clinical depression.

How poverty and destitution are systemic problems

Contrary to what some politicians continue to imply, research shows that the distress stemming from deprivation is not a weakness: it is not about an individual in trouble needing re-education.

Instead, poverty is a systemic problem. Research shows that the distress people affected by poverty experience arises from the deep-rooted inequality underpinning a faulty system.

In 2018, as the UK government prepared to finalise its welfare reform project with the introduction of universal credit, the House of Commons Public Accounts Committee published a withering analysis (no longer available on the UK parliament’s website) of the government’s approach. The committee reportedly concluded that the department for work and pensions (DWP) had a “fortress mentality”, making them unresponsive to universal credit claimants’ experiences.

My research supports this analysis. Interviews with universal credit claimants show a lack of understanding on the part of policymakers of the lived experiences of people affected by their policies. When the benefits system was digitised, people experienced delays in receiving payments. As a result, some went into arrears on rent. Use of food banks and rates of poverty and homelessness rose too, which further impacted people’s mental and physical health. As one participant told me:

With universal credit, when the money comes in and sometimes you don’t know, there are delays and all of that. So, there is a gap and then you have more people homeless or people using food banks, struggling.

In their book, The Violence of Austerity, editors Vickie Cooper and David Whyte compiled multiple accounts from academics including Danny Dorling, who highlighted the extent to which austerity measures had violated the wellbeing of people across Britain. Austerity, of course, dominated political and public discourse for most of the 2010s. The cost of living crisis is now replacing it.

Short-sighted and harsh policy approaches to administrating public finances tend to have a detrimental impact on the most economically vulnerable. Heeding the voices of those people, on how their lives, their livelihoods and their wellbeing is affected, is crucial.

Bruno De Oliveira is a member of the Labour Party.