Question

How does Beck’s theory explain the housing crisis

Answer 1

Beck's Cognitive Theory of Depression portraits Depression Showing the Formation of Dysfunctional Beliefs. This theory states how early experiences can sometimes lead to the formation of dysfunctional beliefs, which in turn lead to negative self views, which in turn lead to depression.

When in 2006, the housing prices peaked at its highest people faced a lot of difficulty in buying houses at took major loans which latter they were unable to repay. Hence, when the housing prices became very low at 2012 people still weren't purchasing houses due to disbelief and bad experience from past, leading to housing crisis.