[1] Jahoda was born in Vienna to a Jewish merchant's family, and like many other psychologists of her time, grew up in Austria where political oppression against socialists was rampant after Engelbert Dollfuss claimed power.

Together with her husband Paul Lazarsfeld and Hans Zeisel, she wrote a now-classic study of the social impact of unemployment on a small community: Die Arbeitslosen von Marienthal (1932; English ed.

Marienthal was an industrial district that suffered very high levels of unemployment in the 1920s, and the research team examined the (often devastating) psychological consequences.

Jahoda founded the Research Center of Human Relations, and was recruited by the University of Sussex in 1965, where she became Professor of Social Psychology.

In the 1980s, when unemployment levels were again high, this approach was rather influential, and her Marienthal studies attracted renewed interest: she made many presentations on this topic in Europe.

She was at that time working at the Science Policy Research Unit, where she had also contributed substantially to the Unit's work on innovation and futures studies – most visibly in the coedited study by Christopher Freeman and Marie Jahoda (eds) 1978, World Futures: the Great Debate (published by Martin Robertson in the UK).

In her book Current Concepts of Positive Mental Health (Basic Books, 1958), Marie Jahoda summarized and integrated previous work by social, psychodynamic, and humanistic psychologists such as Gordon Allport, Erik Erikson, Erich Fromm, Heinz Hartmann, Abraham Maslow, and Carl Rogers.