Understanding Economic Pessimism in Iran
Survey data reveals a political dilemma for Iranian authorities.
By Esfandyar Batmanghelidj
This article was originally published in French by Le Grand Continent.
Much has been written about Iran’s long period of economic malaise, which began in earnest in 2012 when international financial and energy sanctions were imposed on the country. In the thirteen years from 2000 through 2012, the Iranian economy grew at an average annual rate of 4.4%. In the unluckily thirteen years from 2013 through 2025, average economic growth slowed to just 1.9%. Following the initial sanctions shock, the country was gripped by currency devaluation, inflation, and a paralyzing drop in investment. These difficult economic conditions have led to increasingly frequent rounds of national protests, including strikes by truckers, walkouts by oil workers, and the ongoing demonstrations initiated by mobile phone sellers. These protests, often triggered by specific economic frustrations, have become outlets for deeper political grievances as protestors drawn from across social groups challenge the authority and legitimacy of the Islamic Republic.
On one hand, the economic frustrations of ordinary Iranians are completely understandable. The halving of the growth rate represents a profound shift in the country’s economic trajectory. Households that twenty years ago experienced consistent improvements in their standard of living are now barely getting by. But on the other hand, as the economic data demonstrate, Iran is not undergoing an outright economic collapse like those experienced in other sanctioned countries, such as Venezuela and Syria. The year in which the current cycle of national protests began, 2017, was a year of robust economic growth as the country continued to enjoy the benefits of broad sanctions relief. That year, the inflation rate was below 10%, just one-fourth of the current level. Even today, after so many difficulties, Iran has avoided a protracted recession and most Iranians continue to make ends meet in the face of high inflation and stubborn unemployment. Yet, economic pessimism continues to rise.
In 2022, economic commentator Kyla Scanlon coined the popular term “vibecession” to describe a situation when economic conditions remain generally stable, but people continue to report pessimism about the economic outlook. In a vibecession, people feel like a recession is occurring even if such a recession is not an “economic reality.” The term may not capture the gravity of what is happening in Iran, but the persistence of the Iranian version of the vibecession, which has gotten little formal attention, raises serious questions about whether economic reforms, even substantial ones, would fundamentally improve the political situation in the country.
There is a large body of opinion research that sheds light on the attitudes and behavior of ordinary Iranians. This research has garnered relatively little attention, perhaps because of a mistaken belief that it is impossible to conduct robust and reliable surveys in Iran. Over the past year, Kian Tajbakhsh and I have conducted a systematic analysis of the most significant nationally representative surveys conducted in Iran for which data is publicly available. These surveys, which have been implemented in multiple waves using consistent question structures, include global polls fielded by organizations such as Gallup and the World Values Survey Association. They also include surveys uniquely focused on Iran, such as those commissioned by the Center for International and Security Studies (CISSM) at the University of Maryland and those fielded by the research outfit GAMAAN. Finally, there are also major surveys conducted by Iranian institutions that use robust methodologies, such as the Arzesha-ha va Negaresh-ha Iranian survey (“Values and Attitudes of Iranians”) fielded by the Ministry of Culture. Our review of these surveys, which trace key trends in Iranian attitudes and behaviours across 20 years, offers powerful insights into the political, social, and economic situation in Iran. But it is the findings related to economic attitudes that are most instructive for understanding the drivers behind the current wave of protests.
Unsurprisingly given the economic situation, polling in Iran points to a persistent negative perception of the country’s economic conditions. Across eleven survey waves between 2015 and 2024, respondents to CISSM surveys were asked, “In your opinion, how good or bad is our country’s general economic situation?” The proportion of respondents who believed that the economic situation was “good” or “very good” was highest in May 2015 at 54%, possibly reflecting the Rouhani administration’s success in taming inflation. Sentiments were at their lowest level in October 2020, during the pandemic, with just 24% of respondents indicating that the economic situation was good or very good. As of October 2024, sentiments had improved, with the positive responses rising to 31%, possibly reflecting the stabilisation of the economy after the pandemic shock. Even so, a significant majority of Iranians believe the country’s economic situation is “bad.”
These negative sentiments also extend to expectations about the future. Respondents to CISSM surveys have been asked: “Right now, do you think economic conditions in Iran, as a whole, are getting better or getting worse?” This question has been included in eleven survey waves between 2015 and 2024. The most positive sentiments were recorded in May 2015, with 50% of respondents indicating that economic conditions were “getting better,” a notably low proportion considering that the Iranian economy swung from a 1.5% contraction in 2014 to a 5% expansion in the following year. The most negative outlook was recorded in October 2020, the first year of the pandemic, with just 22% of respondents stating that economic conditions were improving. Since 2020, there has been a modest recovery in sentiments, with 30% of respondents reporting that economic conditions were getting better.
Importantly, the CISSM questions on present and future economic conditions were fielded to the same respondents in each wave. Yet, despite periods of improvement in the view of present economic conditions, the proportion of respondents who believed conditions were “getting better” never exceeded 50%. A very similar question is asked in the surveys fielded by Gallup, although the respondents are asked about conditions in the area where they live, rather than in Iran at large. In all but three years between 2006 and 2024, respondents were asked this question: “Right now, do you think that economic conditions in the city or area where you live, as a whole, are getting better or getting worse?” Like in the CISSM survey, the proportion of respondents who believe conditions are “getting better” has never exceeded 50%. As of 2024, 37% of respondents believed that Iran’s economic conditions were getting better, reflecting a modest recovery in sentiment that aligns with the trend captured by the CISSM survey waves.
Negative sentiment regarding Iran’s economic outlook was also captured in the fourth wave of the Arzesh-ha survey, which was conducted in 2020. Respondents were asked to evaluate the recent trajectory of Iran’s economy, by answering “How has the country’s economic situation changed compared to the past 5 years?” Just 10% of respondents reported that economic conditions had improved. Respondents were also asked “How will the country’s economic conditions change in the next 5 years?” Again, just 17% of respondents indicated that economic conditions “will become better.”
Looking across these surveys, we see that sentiments about the current state of the economy do improve during periods of economic recovery, such as the period of sanctions relief between 2013-2018. This suggests that Iranians are mainly forming their opinion of the country’s economic situation through their direct experiences. In this period, foreign and domestic media reported extensively on Iran’s robust economic growth, rising oil exports, falling inflation, and committed inflows of foreign direct investment. Yet the benefits of sanctions relief were slow to trickle down. The improvements in sentiment that could be observed were modest and did not lead to significant shifts in perceptions of future economic performance. As reflected in the Arzesh-ha survey, even during the height of the pandemic, only a small minority of Iranians believed that economic conditions would improve in the medium-term, reflecting a profound degree of pessimism about the country’s capacity for crisis recovery.
Iranians are mainly forming their opinion of the country’s economic situation through their direct experiences.
Alongside negative perceptions about the economy at large, Iranians also report growing pessimism about their standard of living. This trend is reflected in two types of survey questions. First, several surveys have asked Iranians to report economic hardships and their level of satisfaction with their financial situation. Second, several surveys have asked Iranians about whether they believe their standard of living will improve or worsen. Both sets of survey questions indicate that Iranians are increasingly pessimistic about their own economic circumstances.
In all but two years between 2006 and 2024, Gallup surveys in Iran have asked respondents about their ability to afford food and housing. Respondents were asked “Have there been times in the past 12 months when you did not have enough money to buy food that you or your family needed?” The proportion of respondents who replied “no” was highest in 2006 at 84% and lowest in 2015 at 44%. As of 2024, the proportion had risen to 62%. By leaving it up to the respondents to decide what kind of food their family “needs,” the question serves as a measure of whether Iranians feel they can reliably make ends meet considering their standard of living. Similar trends can be seen in housing. The Gallup survey also asked “Have there been times in the past 12 months when you did not have enough money to provide adequate shelter or housing for you and your family?” The highest proportion of “no” responses was recorded in 2007 at 73%. The lowest proportion was recorded in 2013 at 49%. As of 2024, the proportion of “no” responses was 61%.
The proportion of individuals reporting that they face food or housing insecurity has decreased in recent years, correlating with a marginal improvement in Iran’s economic conditions. Today, a majority of Iranians continue to be able to make ends meet, at least according to the perceived needs of their own families. But survey data also suggest that Iranians have adjusted their expectations and are willing to express satisfaction with lower living standards. In the 2020 World Values Survey, respondents were asked to rate financial satisfaction on a 1-to-10 scale. The plurality of respondents (26%) chose a neutral score of 5. Positive responses outweighed negative ones: 47% rated their situation at 6 or above, compared to just 27% who rated it 4 or below. CISSM data from 2021 captures similar sentiments using a 0-to-10 scale where respondents were told the “top of the ladder represents the best possible life for you and the bottom of the ladder represents the worst possible life for you.” There, too, the most frequent response was the midpoint (5), selected by 27% of respondents, with another 34% placing themselves higher on the ladder. In short, most Iranians remain relatively satisfied with their personal circumstances, even as they express deep frustration with the country’s broader economic outlook.
However, even if Iranians are finding ways to cope with economic pressures this has not diminished views that social mobility in Iran is under threat. The Arzesh-ha survey fielded in 2023 asked “Do you think the gap between the rich and the poor has widened or narrowed compared to five years ago?” A significant 88% of respondents reported that the gap had widened. Additionally, in the same survey, 78% of respondents agreed with the statement that “In our society, the rich get richer every day, and the poor get poorer.” The strength of these sentiments suggests that even when Iranians perceive general improvements in the country’s economic situation, they still feel generally unable to improve their own economic circumstances. At the same time, even if Iranians express satisfaction with their own economic situation, they are likely to have negative views of the overall economic situation.
Such seemingly contradictory views of personal circumstances and the state of the national economy have emerged as a major challenge for economic policymakers around the world, including in the United States. A 2024 survey on the economic wellbeing of American households conducted by the Federal Reserve Board found that 73% of adults reported they were financially “doing okay” or “living comfortably,” while only 29% of adults rated the economy as “good” or “excellent.” If U.S. policymakers cannot convince American voters of the health of the economy, even as most Americans feel economically secure, how can Iranian policymakers expect to convince citizens that their economic policies are working?
Even if Iranians express satisfaction with their own economic situation, they are likely to have negative views of the overall economic situation.
Importantly, polling shows that Iranians consistently identify mismanagement as the primary cause of the country’s economic problems. Surveys fielded by CISSM have asked respondents to identify a primary cause of Iran’s economic challenges. Across nine survey waves from 2015 to 2024, CISSM has asked “Which of the following do you think has had the greatest negative impact on the Iranian economy?” The responses have been strikingly consistent across these waves. On average, 60% of respondents cited “domestic mismanagement” as having a more significant impact than “foreign sanctions and pressures” on the Iranian economy. Small fluctuations can be seen in years in which sanctions intensity has changed. For example, the proportion of respondents citing sanctions as having the greatest impact rose from 32% to 36% between the beginning and end of 2018, the year in which the Trump administration reimposed sanctions on Iran. A similar question was asked by GAMAAN in a 2021 survey. The survey asked, “According to you, which of these factors have had the worst impact on the Iranian economy’s current situation?” Just 10% of respondents selected “sanctions and foreign pressures” whereas 86% selected “domestic inefficiency and corruption.”
The consistent identification of mismanagement and corruption as the primary cause of Iran’s economic failings makes sense when one considers that ordinary Iranians directly experience corruption and mismanagement, whereas most economic impacts from sanctions are indirect. The World Values Survey, fielded 2020, asked respondents to rate the level of corruption in Iran on a 10-point scale. A notable 60% of respondents indicated a score of 6 or higher and 34% of respondents indicated the highest score of 10 which corresponded to the statement “corruption is abundant in my country.” In the same survey, 37% of respondents indicated that “most” state authorities are “involved in corruption.” When asked about the level of corruption among business executives, the same figure rose to 43%. These popular sentiments are shared by Iran’s most senior economists, such as Saeed Laylaz, who declared in a recent interview, “the Iranian economy is completely corrupt and out of shape.”
Considering how their management of the economy is perceived, Iranian policymakers face an enormous challenge as they seek to restore public trust through programs such as the recently announced cash transfers, which are intended to shore-up living standards. Not only do improvements in economic circumstances fail to lead to meaningful improvements in sentiments about either current or future economic conditions, but the Iranian public remains highly pessimistic about the fundamental ability of Iranian policymakers to administer economic policies of any kind. Moreover, persistent economic pessimism has shaped consumer and firm behavior, curtailing the consumption and investment that could help Iran escape its economic doldrums. To adapt from Scanlon, when pessimism about the state of the economy combines with pessimism about economic policy, “it seems like everything is falling apart.” Certainly, the pathway for sustained economic development in the country is more obscure than at any point since the Iran-Iraq War. But everything is not really falling apart, at least not yet. Does that mean that the situation is salvageable? Can economic reforms lead to an improvement in economic sentiments, bringing an end to Iran’s period of recurring strikes, walkouts, and protests?
At least in the domain of economic welfare, Iran’s leaders are confronted with a degree of public anger about the general economic situation that is disproportionate to the reality of the economic sentiments of most Iranians. This observation is not meant as a judgement on the protests themselves, which represent real grievances that go far beyond economic frustrations alone. But the observation clarifies the pernicious role that public opinion can play in the pursuit of economic reforms.
At an individual level, many protestors are no doubt motivated by deprivation and economic hardship they have directly experienced—lost jobs, vaporized savings, abject poverty—setting aside the experiences of repression and state violence. But as a societal phenomenon, the protests reflect sentiments about the present and future that are shaped less by personal experiences and more by a kind of socialized pessimism, a pervasive negative “vibe.” To rescue Iran’s economy and possibly their regime, the leaders of the Islamic Republic need to accomplish something far more difficult than modifying economic policies, they need to change how ordinary people perceive the effects of those policies. Unsurprisingly, when it comes to their chances for success, pessimism is warranted.
Esfandyar Batmanghelidj is the CEO of the Bourse & Bazaar Foundation and an Adjunct Professor at Johns Hopkins SAIS. He is a member of the Bologna Initiative for Sanctions Relief.
Photo: IRNA