War can take a toll not only on mental health, but also on financial stability, and the two may reinforce each other over time. A yearlong study following Israelis after October 7 found that early depression and anxiety predicted later economic hardship, while financial strain went on to predict worsening depression, anxiety and PTSD. The findings suggest that recovery from prolonged conflict may depend on addressing both psychological distress and economic pressure together.

In the first weeks after the October 7 attack, distress was widespread. But for many Israelis, the psychological consequences of the war did not unfold separately from another growing source of pressure: money.

A new longitudinal study led by Dana Katsoty of the Hebrew University of Jerusalem found that economic hardship and mental health became closely intertwined during the first year of the Israel-Hamas war.

The research, published in Social Psychiatry and Psychiatric Epidemiology, followed 1,035 Jewish Israeli adults beginning two weeks after the October 7 attack. Participants were surveyed four times over the following year and reported symptoms of depression, anxiety and post-traumatic stress, as well as financial difficulties including job loss, unpaid leave, reduced income, increased expenses and business losses.

What emerged was not simply a picture of financial stress contributing to poorer mental health. Instead, the relationship appeared to work in both directions, and at different points in time.

Early in the war, people reporting higher levels of depression and anxiety were more likely to experience economic hardship in the months that followed. Later, the pattern reversed: financial difficulties predicted subsequent increases in depression, anxiety and PTSD symptoms.

The findings suggest that prolonged conflict can create a reinforcing cycle in which psychological distress makes it harder to maintain stability in everyday life, while financial losses and uncertainty place additional strain on mental health.

“Our findings suggest that the psychological and economic consequences of prolonged conflict cannot be treated as separate problems,” Katsoty said. “Mental distress may increase a person’s vulnerability to financial hardship, and that hardship can then contribute to further psychological difficulties. Supporting recovery may therefore require addressing both at the same time.”

Mental health symptoms were particularly high immediately after the attack. Two weeks afterward, 55.8 percent of participants scored above the clinical cutoff for depression and 61.1 percent for anxiety. Those rates declined substantially over the following six months, but began to rise again by the one-year mark. PTSD symptoms, measured later in the study, rose from 16.9 percent at six months to 21.4 percent after one year.

Economic disruption was also common. At each assessment, a large share of participants reported at least one or two negative financial events, such as reduced income, job disruption or higher expenses. By the one-year mark, more than half of participants were still in the study's moderate economic-hardship category.

The greater the economic hardship participants experienced, the worse their mental health tended to be. Even after researchers accounted for factors including age, gender, prewar income and level of exposure to wartime events, greater financial hardship was consistently associated with a higher likelihood of clinically significant depression, anxiety and PTSD symptoms.

The researchers also found what they described as a clear dose-response relationship: people who experienced more negative economic events generally reported more severe symptoms of depression, anxiety and PTSD.

One notable finding was that economic hardship had a stronger and more consistent association with mental health than the researchers' overall measure of direct war exposure. The authors cautioned that different forms of exposure, from displacement to the death of a loved one, are difficult to capture with a single measure. Still, they suggested that financial strain may affect daily life in a particularly persistent way, influencing a person's sense of security, control and ability to plan for the future.

The findings suggest that responding to the long-term effects of war may require more than psychological treatment alone. The researchers argue that emergency and rehabilitation programs should combine mental-health care with economic support, particularly for people facing loss of income, employment instability or rising expenses.

Without such support, they write, people affected by prolonged conflict may face a “double burden,” in which financial strain intensifies the psychological consequences of war, and psychological distress makes economic recovery more difficult.