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The Psychology of Finance

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It may come as no surprise that victims of horrific natural disasters experience many of the same symptoms as individuals in the midst of a financial crisis. For example, victims of the recent earthquake in Japan exhibited both physical and emotional abnormalities such as "shock, anger, guilt and confusion;" as well as "fatigue, insomnia, and eating disturbances."

Logic then suggests that the solutions to symptoms from both recessions and disasters would be analogous in nature.

The American Psychiatric Association and Dr. Ann Wolbert Burgess, Professor of Psychiatric Nursing, William F.Connell School of Nursing, Boston College; agree that victims suffering from the symptoms of disaster receive therapies consistent with restoring a sense of control, security and safety.

In her book, "Victimology: Theories and Applications", Dr. Burgess points out that the role of the family is of utmost importance as a resource of support; victims can only heal when they no longer perceive themselves as being alone. Connecting with individuals and institutions predisposed to empathize with the sufferer, is also tantamount to recovery according to her report.

In an address to the United Nations General Assembly, Dr.Sakiko Fukuda-Parr, a financial expert who just launched a new website, outlined the long-term effects of pro-longed recession on people from various global economies. Consistent with the Burgess standpoint, the effects are all-encompassing.

In a quote from the address, "Households cope to meet basic needs through a variety of mechanisms such as sending out children or the elderly to work, reducing consumption of food and other essentials with consequences for health, withdrawing children from school and so on. Such coping strategies have not only immediate consequences for well-being of the individual and family, but undermine longer term development for the society as a whole."

Dr. Fukuda-Parr does not paint a pleasant picture. If there is any proof of hope for investors, it may lie in the proverbial pudding. Taking the Burgess model, it would seem probable that application of the same techniques used to help earthquake victims might in fact soothe the tattered financial soul. If a financial institution could take the paradigm purported by Burgess and succeed in superimposing its blueprint onto their core structure, the ideal remedy may be on the horizon.

While systemic change in any well-established industry can only occur over time; every revolution has a point of origin. The financial institutions that will be able to create a positive financial exemplar will undoubtedly incorporate proactive methods of partnering with their investors. Those that master this new type of partnership will lead the pack. In times wrought with financial insecurity, steady ground will be the place investors instinctively gravitate to for even the smallest modicum of relief.

Khurram Aziz is a freelance writer and entrepreneur with over 10 years' experience in publishing. Please feel free to add him on Twitter @khurramaziz1981. Read more stories by Khurram Aziz.

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