Coping with a financial emergency: Lessons from the pandemic

Maria Gafforio
Alya Hazell

This is the first instalment in a four-part series aiming to use the analogy of public health as a tool for finding solutions to improve both individual and institutional financial health. If Britain's finances are now a public health emergency (as we argued in the series introduction), then lessons from the last major health emergency - the Covid-19 pandemic - could provide fresh ideas for keeping people afloat.

During the pandemic, governments and health organisations implemented hundreds of different behavioural interventions to try and keep citizens safe. These interventions operated at both an individual level (e.g. advice on hand washing) and at a systemic level (e.g. stay indoors regulation). Both levels of intervention are required for successful public policy. [1] But what if the very same tactics leveraged during the pandemic could also be used to improve the UK’s financial health? Let’s start by looking at system-level policies.

Strengthening society's response to financial challenges

Knowledge sharing and broadcasting

Taking inspiration from responses to the pandemic, joint task forces from across the public and private sectors could be set up to rapidly share knowledge about the evolving financial situation (both globally and on the ground), as well as establish clear information and advice for the public. They could communicate answers to key questions like What is causing bills and rates to rise? How long is that likely to keep going? What else is happening to control the situation? And they could create a go-to site with the latest advice and support available (combining many of the high-quality but disparate resources already out there). By adopting a concerted and transparent approach, institutions can hope to raise public confidence and even trust - a trust which has been deeply frayed since the 2008 financial crisis.

Free tests and advice

At the height of Covid-19, the government provided free tests and encouraged people to report their results, whether positive or negative. This data helped the government better understand how the virus was spreading, and identify the locations most at risk in order to divert resources to those areas. Could a simple ‘financial fitness’ test not only help people get a better sense of their financial situation but also provide institutions with a stronger diagnosis of Britain’s financial health in these challenging times? A version of this for individual use has already been launched by HSBC: their Financial Fitness tool analyses your spending, borrowing and savings habits to give you a ‘fitness score’ on the back of which you can book a ‘health check’.³ But if the tool was disseminated more widely, and people consented to share their (anonymised) data, this could help institutions paint a detailed picture of the country’s ‘financial fitness’; and, just like in the pandemic, identify how and where to intervene first.

Payment holidays

Both the pandemic and the current financial emergency have exposed major vulnerabilities in the traditional socio-economic system that have required unprecedented public and private sector intervention. Mortgage payment holidays are one such intervention. Introduced in March 2020 as the UK entered lockdown, they have now been called for again by the Mayor of London to help address the cost of living.⁴ But perhaps the current state of crisis calls for more radical changes to Britain’s welfare state. In 2020, more than 170 MPs and peers urged the government to introduce a Universal Basic Income (UBI) to help people weather the pandemic. Now, at the height of the UK’s financial crisis, a pilot program has finally been launched to test the effects of providing a UBI to British citizens.⁵ Although limited in scope for now, the trial will hopefully lead to more robust experimentation to identify innovative solutions to today’s challenging economic climate.

Unlocking Individual behaviour change

Alongside policies that targeted macro societal changes, governments and public bodies also used communication tactics that leveraged concepts from the behavioural sciences, including: rules of thumb, the messenger effect and cognitive dissonance.

Rules of thumb

One of the core tenets of behavioural science is that humans generally avoid ‘cognitive effort’ to preserve our energy. This means we often rely on mental shortcuts to make decisions instead of carefully calculating costs and benefits.² One example of a mental shortcut is a rule of thumb - a broad guiding principle based on experience and common sense. In the context of Covid-19, simple rules of thumb helped reduce the cognitive load of understanding (and therefore following) government guidance. In other words, knowing that you should always wear a mask, wash your hands for 20 seconds, and stay two metres away from others makes it easier to remember to do the right thing.

Despite (or in spite of) the plethora of tools now available, the world of personal finance has become hugely cognitively draining. People now have the option of things like cryptocurrency, gamified investing and Buy Now Pay Later finance while also dealing with wage insecurity from zero hours contracts and the gig economy. It’s difficult for even a well-informed citizen to maintain good financial decision-making. Learning from the pandemic, financial institutions and authorities could communicate simple rules of thumb that make it cognitively easier to stay financially ‘safe’. Messages like:

  • If you don't understand it, don't invest in it
  • Never use more than 30% of your credit limit
  • Don't buy an item if you can't buy it twice
  • Aim to have an 'emergency fund' of three months salary

Taken in isolation, these suggestions are too simplistic and won’t apply to everyone. In order to have an impact, they need to be tailored to the audience, delivered in the right context, at the right frequency, and with the right messenger.

The messenger effect

The messenger effect is another example of a mental shortcut. When receiving information or advice, we often rely on pre-existing perceptions of the credibility, or even likability, of the person (or institution) delivering that information or advice. During the pandemic, community leaders, scientists and medical institutions often commanded greater influence and attention than the government, as politicians could be perceived to have a ‘hidden agenda’. Perhaps financial institutions could also engage different messengers to better support people in challenging economic times. Collaborating with academics (i.e. ‘scientists’) could provide a ‘trusted expert’ perspective while partnering with community leaders could target individuals who mistrust authorities. In a time where young people increasingly seek money advice on Instagram or TikTok, perhaps banks could work with finance influencers to ensure they disseminate accurate and helpful information.

Cognitive dissonance

Finally, let’s look at cognitive dissonance: the mental conflict people experience when their beliefs don’t align with their actions, especially those that are important to their identity. Like the discomfort you might feel as an eco-conscious citizen getting on an airplane. During the pandemic, cognitive dissonance was leveraged by those trying to increase vaccine uptake. They’d ask people who were hesitant about the jab to reflect on the effects this might have on their family. By highlighting that not taking the vaccine could be at odds with being a good son, daughter or family member, they were able to motivate new behaviour. A similar approach could be taken to help people avoid getting into (further) debt. For example, by enforcing an intervention for people taking out a credit card, loan or even Buy Now Pay Later finance to consider which of their family members might have to help them out if they can’t afford to pay the money back.

These are just some potential i-Frame interventions you can learn from the pandemic - no doubt there are many more. But most importantly, nudging individuals alone isn't enough to prevent financial insecurity. It’s a combination of these societal interventions and individual-level behaviour change initiatives that could make a substantial difference to the UK’s ability to weather the current financial ‘crisis’.

Curious to explore this topic further? Check out Personal finance: A public health emergency for more insights and learnings.

In conjunction with this article series, we’ll be running workshops connecting people in industries like finance, healthcare, politics, design and beyond to expand on the emerging ideas and find opportunities to bring them to life. No matter what your role, we’d love to get you involved - please reach out to [email protected] if you’re interested.


  1. Chater, N., & Loewenstein, G. (2022). ‘The i-frame and the s-frame: How focusing on individual-level solutions has led behavioral public policy astray’, Behavioral and Brain Sciences. Available at: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4046264
  2. Thaler RH. (2018). ‘From cashews to nudges: The evolution of behavioral economics’, American Economic Review. Available at: https://www.aeaweb.org/articles?id=10.1257/aer.108.6.1265
  3. https://www.hsbc.co.uk/financial-fitness/fitness-score/#health-check
  4. Talora, J. (2022). ‘Sadiq Khan calls for return of mortgage payment holidays amid rising inflation’, Evening Standard, 07 November. Available at: https://www.standard.co.uk/news/london/sadiq-khan-inflation-mortgage-payment-holiday-b1038141.html.
  5. Ali Hussen, D. (2023). ‘Universal basic income of £1,600 a month to be trialled in two places in England’, The Guardian, 04 June. Available at: https://www.theguardian.com/society/2023/jun/04/universal-basic-income-of-1600-pounds-a-month-to-be-trialled-in-england.