The recession that was experienced in the whole world adversely affected national economies, regional economies and the global economy. It led to foreclosed homes, loss in production, bankruptcy of companies and the resultant loss of employment. Gross domestic product and economic growth of countries stalled and, in many cases, declined. While the recession wreaked havoc on businesses and economies, it took a toll on humans too. The recession affected people’s lives in various ways.
The recession created economic, political and social instability all over the world. While the developed countries were better able to cope with the adverse effects of the recession, lower middle-income countries and developing countries experienced significant political instability as a fallout of the recession. Many countries adopted austerity measures that led to violent strikes and agitations by the citizens of the countries. This brought regime changes in some countries and the emergence and popularity of far-right political parties in others. In addition to these issues, the recession affected people’s lives at a more personal level.
According to the study, ‘Economic suicides in the Great Recession in Europe and North America’ published by The British Journal of Psychiatry, the recession led to atleast 10,000 economic suicides between 2008 and 2010 in Europe and North America. Economic suicides can be defined as suicides that are induced by job losses, debt and foreclosures. When counting the losses of the recession, it is important to consider these economic suicides too. If these 10,000 people earned US $45,000 on average and could work for another 30 years, the lost economic value of these suicides would be the product of the number of suicides, income per capita and the number of years they could have worked from the time they committed suicides. This yields US $13.5 billion, which is a conservative estimate of the lost production of the people who committed suicides due to recession-induced factors. However, the work that people perform often create externalities. For example, the contribution of an elementary school teacher to the society is not limited only to her annual income but also includes the students becoming capable workers and law-abiding citizens in the future. Therefore, the work of the elementary school teacher creates positive externalities that are not captured by her annual income. This indicates that the lost economic potential of the 10,000 suicides may be significantly more than US $13.5 billion.
The relationship between recession and crime is ambiguous. During some recessionary periods, crime rates have increased. It is normally expected that recession causes unemployment and makes it difficult for people to have a decent life, compelling them to commit crimes. However, not all recessions have been accompanied by rise in crime rates; crime rates have declined during some recessions. The successful use of programs like unemployment benefits and retraining of workers certainly help to dissuade crime rates.
Recession has an impact on marriages. Recession and the resultant financial problems put a strain on marriages that may lead to increase in divorce rates, as also suggested by the late Noble-prize winning economist Gary Becker. However, recession may also lower divorce rates as mentioned by Marina Adshade, an economics professor at Dalhousie University in an article titled, ‘Economic recession lowers divorce rates’ for Canadian Business. First, the cost of filing for divorce is substantial which may make it economically difficult for couples to divorce during recessions. This can induce people to seek marriage counseling and try to make their marriages work. Secondly, splitting their assets when asset prices, including real estate prices, are low may not make much economic sense to divorcing couples. This can encourage them to cancel divorces or, atleast, postpone them. Finally, being together during recession when people lose jobs, provides increased financial security to couples which may again motivate them to remain married. However, it has been observed that improvement in economic conditions lead to increase in divorce rates. As the economy improves and more jobs become available while asset prices, including real estate prices, increase, it becomes economically feasible for couples to divorce. This leads to an increase in divorce rates. The Office for National Statistics (ONS) found that the divorce rate in England and Wales increased by 0.5 percent in 2012, compared to 2011. According to BBC News, the ONS report mentioned, ‘Recent trends could be consistent with the theory that recession is associated with an increased risk of divorce, but with a delayed impact’. This indicates that recession does have a negative impact on marriages and lead to higher divorce rates.
Again, recession has an impact on abortions. One argument is that recession brings increased financial strain and insecurity which could lead to a higher rate of abortion. However, the increased availability and accessibility of birth control would seriously weaken this argument. According to the Centers for Disease Control and Prevention, abortions in the US decreased by five percent during the recent recession. Therefore, recession seems to have a negative impact on abortions.
Overall, it can be unequivocally stated that recession does not only adversely impact businesses, employment and national economies but also have impacts on the lives of human beings. The increased number of suicides and the resultant loss of output are wake up calls for policy makers to alleviate the problems that people face during recession. A wide variety of social safety programs like unemployment benefits, retraining, career counseling and mental health counseling may help alleviate the suffering of people during recession which may reduce the number of suicides committed during recessionary times. In the long run, this will also help to increase the size of the economy.