Does austerity improve morale? According to people such as the British Prime Minister David Cameron, or the US congressman Paul Ryan, the answer is yes. They claim that austerity measures reduce welfare dependency and encourage creativity and entrepreneurial attitudes. However these guys seem to misunderstand how miserable people’s life can become when fiscal austerity leads to higher unemployment. As Robert Shiller points out, “fiscal austerity that is being practiced now has the immediate effect of rendering people jobless and filling their lives with nothing but a sense of rejection and exclusion”.
Go to the article for an interesting analysis of the austerity-morale nexus.