Interested in achieving wealth? Psychology may be a better starting place…

Financial Planning Dentist

This blog post explores the intriguing relationship between mental well-being and economic prosperity. We delve into the world of economics and psychology to investigate whether therapy, aspirational videos, and antidepressants can pave the way to financial success.

In our quest for prosperity, we often focus on tangible solutions such as infrastructure development and economic policies. However, an intriguing and emerging field of economic research is shedding light on the profound impact of psychological interventions on wealth accumulation. In this blog post, we delve into the fascinating intersection of economics and mental well-being, exploring the question: Can therapy, aspirational videos, and even antidepressants pave the way to financial success?

In impoverished nations grappling with the aftermath of war, violence, food scarcity, or natural disasters, trauma is pervasive. Psychological interventions hold promise as modest tools for economic self-improvement. For instance, a study in Ethiopia examined the psychological effects of elevating aspirations. Researchers conducted a randomized control trial, screening short films depicting business and entrepreneurial success within the community to one group. Six months later, those who had watched the films had exhibited more work, savings, and investments in education compared to the control group. Even five years down the line, households exposed to the films had accumulated more wealth, and their children had received an additional 0.43 years of education, which is considered quite remarkable.

A similar impact was observed in Mexico, where an aspirational video shown to female microenterprise owners resulted in improved business performance through a randomized control trial.

Intensive versions of such treatments are likely to be effective. Certain cultures, like the overseas Chinese and Lebanese communities, have traditionally displayed strong entrepreneurial tendencies, benefiting from a steady diet of cultural influences, including parental guidance, peer pressure, aspirational media, music, and television. The question is not whether cultural conditioning works—it does—but rather how effective a smaller, more targeted dose can be.

However, some psychological interventions yield only temporary effects. For example, a study in India taught self-efficacy lessons to women, leading to a 32% short-term increase in employment likelihood, but the effects faded within a year.

When it comes to psychotherapy, prominent in much of the Western world, evaluating its impact is challenging due to cost and regulatory constraints that hinder randomized control trials. Nevertheless, there are encouraging findings. A survey across lower- and middle-income countries identified 39 studies demonstrating that psychotherapeutic treatments could enhance work-related outcomes, including employment, through randomized control trials. Treating schizophrenia seems to have a particularly significant effect. In Pakistan, mental health treatments for perinatally depressed mothers yielded substantial benefits for their children. In Niger, both psychosocial treatments and cash transfers improved outcomes for recipients, although in Kenya, cash transfers proved cheaper and more effective, though psychotherapeutic treatments did yield some gains.

As for antidepressants, economists are only beginning to gather evidence. One study in India found that combining antidepressants with therapy and livelihood assistance had significant positive effects for treated women. Lower depression rates resulted in increased investment in their children and reduced negative life events.

While none of these findings conclusively establish a “psychology of poverty” to be addressed through external interventions, they do suggest that less affluent economies can make incremental gains by investing in what we might call psychological and psychotherapeutic infrastructure. These research designs can be applied to hundreds or thousands of people, though implementing them on a nationwide scale remains challenging. Nevertheless, countries can strive to make therapeutic help more accessible and affordable while fostering a culture where seeking help is encouraged.

Culture plays a crucial role in economic development, and these small-scale cultural interventions can have a marginal impact. What about the United States, with its abundance of psychotherapeutic ideas, aspirational videos, and antidepressants? It’s hard to say. While the research is in its early stages, it may not be too soon to suggest that, from an economic perspective at least, embracing psychological and pharmaceutical interventions more openly could be better than the alternative.

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