Tuesday, March 24, 2009

Child psychology

A different take on the roots of the financial crisis from Peter Totterdell, of Sheffield Uni's Institute of Work Psychology, who's profiled in today's Education Guardian:

Look at the causes of the credit crunch and you can see clear evidence of what happens when emotion regulation goes wrong, says Totterdell.
"In the financial sector, you've got a situation where people were on an upward spiral," he says. "They are being successful in their speculations. This fuels them into feeling good. They want to maintain that feeling, so they do more of it. They start to ignore the risks, or package up the risks, or push the risks on to somebody else, and there is nothing to stop them. In fact, they are encouraged to do it by the others around them."
He is struck by the similarities between what has happened recently to the banking system and two areas of the research programme. One is mood disorders, such as bipolar disorder, "when people go on these upward spirals and sometimes they think they're invincible, that nothing they can do is wrong, everyone around them is wrong, and their mood spirals upwards, they start taking much greater risks". The other is children, and the way that when they get overexcited, parents have to step in to calm them down, or remind them that if they persist it will end in tears.

Although he's coming at it from a different angle, it's not far from some areas of behavioural economics.



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