October 7: The impact of the war on financial stability
War can have damaging consequences not only for mental health but also for financial stability, with the two pressures potentially reinforcing each other over time.
A year-long study of Israelis following the October 7, 2023 attacks found that early depression and anxiety predicted later economic difficulties, while financial strain was associated with subsequent increases in depression, anxiety and post-traumatic stress disorder (PTSD).
In the first weeks following the October 7 massacre, psychological distress was widespread. But for many Israelis, the mental health consequences of the war did not develop independently of another growing source of pressure: financial insecurity.
A new study led by Dana Katsoty of the Hebrew University of Jerusalem found that economic hardship and mental health were closely interconnected during the first year of the war.
Published in Social Psychiatry and Psychiatric Epidemiology, the study followed 1,035 Israeli Jews who were surveyed four times during the year following October 7. Participants reported symptoms of depression, anxiety and post-traumatic stress, as well as financial difficulties including job loss, unpaid leave, reduced income and increased expenses.
At the beginning of the war, participants experiencing higher levels of depression and anxiety were more likely to experience economic difficulties in the following months. Later in the study, the relationship reversed: financial hardship predicted subsequent increases in depression, anxiety and PTSD symptoms.
The findings suggest that prolonged conflict can create a vicious cycle in which psychological distress makes it harder to maintain stability in everyday life, while financial losses and uncertainty add further pressure on mental health.
“Our findings suggest that the psychological and economic consequences of prolonged conflict cannot be addressed separately,” Katsoty said.
Mental health symptoms rose again after an initial decline
Mental health symptoms were particularly high immediately after the October 7 attacks.
Two weeks after the massacre, 55.8% of participants scored above the study’s clinical threshold for depression, while 61.1% exceeded the threshold for anxiety.
Those rates fell substantially during the following six months, suggesting some degree of psychological adjustment or recovery. However, symptoms began rising again one year after the attacks.
PTSD symptoms, which were measured later in the study, increased from 16.9% at six months to 21.4% after one year.
The pattern highlights the potentially delayed and fluctuating psychological impact of prolonged conflict. While the initial shock may diminish over time, continued exposure to war, uncertainty and disruption can create new or renewed mental health pressures.
Financial hardship remained widespread
Economic difficulties were also common throughout the study period.
At each assessment, a substantial proportion of participants reported experiencing at least one or two negative financial events, including reduced income, job loss or increased expenses.
One year after October 7, more than half of participants were still classified as experiencing moderate economic hardship according to the study's criteria.
Researchers also identified what they described as a clear dose-response relationship: people who experienced a greater number of negative economic events generally reported more severe symptoms of depression, anxiety and PTSD.
The findings point to an important connection between the economic and psychological consequences of war. Financial instability can increase uncertainty and stress, while mental health difficulties can make it harder for people to maintain employment, manage daily responsibilities or recover economically.
Implications for Israel's recovery
The researchers argue that emergency response and long-term rehabilitation programs should address mental health and economic hardship together.
That could include psychological care alongside financial assistance for people facing income losses, employment insecurity or increased living costs.
The study also suggests that the psychological consequences of the October 7 attacks cannot be measured only in the immediate aftermath of the event. Mental health trajectories may change significantly over time, particularly when conflict continues to disrupt employment, household finances and everyday life.
For Israel, where the economic and social consequences of the war have extended far beyond the initial shock of October 7, the findings underscore the need for recovery policies that treat financial security and mental health as interconnected parts of the same crisis.
Caroline Haïat
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