The psychological toll of financial volatility: compulsive habits, gambling parallels, and social policy implications

This mini-review synthesizes recent interdisciplinary evidence showing that financial market volatility carries psychological as well as economic costs. Across 36 studies, two domains emerge: (1) traditional market turbulence, where shocks are linked to economic anxiety, household stress transmission, and panic-selling associated with traits such as neuroticism and hyperbolic discounting; and (2) cryptocurrency and speculative asset markets, where Fear of Missing Out (FoMO), impulsivity, and herding promote short-term, gambling-like risk taking, particularly among younger or inexperienced investors. FoMO frequently mediates loss aversion and speculative engagement, while institutional participation and policy measures exhibit stabilizing, protective effects. Overall, volatility functions as a psychosocial exposure characterized by emotional contagion and behavioral reinforcement, with implications for mental health. The review calls for prevention-oriented policy integrating behavioral finance, public health, and social regulation, and for treating compulsive speculative trading as a candidate for future clinical classification, a hypothesis the current evidence base can motivate but not yet confirm.