Was caution in the financial markets undone by
positive thinking?
When the stock market peaked on Oct. 9, 2007 -- at $14,164.53 -- life was good (wasn't it?). It seemed possible that more good was on the way, financially speaking.
Did buying stock when the Dow Jones was so high represent too much positive thinking?
Were we lulled to sleep by a Prozac- and positive-thinking-inspired trance?
As warnings about low savings rates and debt-financed expansion were issued, were we just too darned optimistic?
The gush of contentedness that psychological treatments promote in contemporary society is unparalleled. We have unlocked a Pandora's box of personal positivity - perhaps without fully understanding its ramifications.
Many scientific discoveries have made runaway positive thinking possible. Psychologists, psychiatrists, and psychobiologists worked hard to reduce the suffering of the chronically worried and depressed among us - to reduce people's psychic pain.
In the early 20th century, newly-minted psychodynamic therapies appeared useful for helping people, but modest in their goals to make people happy.
In the 1950s, psychoactive pharmaceuticals arrived: the first agents to tame anxiety and depression over the long term. New, often better generations of pharmaceuticals followed.
In the 1980s, new advances in psychotherapy focused specifically on techniques that could improve a person's anxiety and depression. Cognitive-behavioral therapy (CBT) taught people methods of rethinking their self concept and more positive ways of understanding the world.
The 1990s saw the Positive Psychology movement. Its adherents were dedicated to identifying people's strengths. Members of the movement implicitly advocated a benign neglect of the dark side of the mind.
Yet emotions such as fear and sadness provide important signals about our environment. In a flock of birds, for example, the most fearful birds are the first to send out warning cries, alerting the flock to danger, so that the group can fly out of harm's way if necessary. Warning their flock places a toll on the fearful (who can make themselves targets of predators), but helps protect the rest.
In humans, emotional intelligence involves reasoning about emotions and emotional information, for example, by interpreting the social meanings of signals of sadness and anxiety. Did some people miss their own fear over unrealistically high stock prices because they were simply too calm about the financial markets?
To be sure, positive thinking would be -- at most -- one among many causes of the financial decline. There have been stock market declines many times before the advent of treatments to reduce negative thinking. Moreover, some contend that depression may be on the rise, despite treatment advances (but could it be that by failing to contend with negative information, matters get worse and cause more depression?).
The promise of Cognitive-Behavioral Therapy and Positive Psychology is that there are many possible positive ways of viewing the world, and that these positive mental models ("reframes" "schemas," etc.) are typically as valid as negative ways of thinking. If positive is as good as negative thinking, that rationale goes, then it makes sense to think positively.
If it makes sense to maintain a positive outlook, then I hope that continued positive thinking can help us cope with the dramatic declines in the financial markets. If so, it would produce a nice applied demonstration that positive thinking works in times of crisis.
Such a triumph of positive thinking would go some way toward calming the financial markets and toward ensuring a more secure financial future. I can't help harboring some doubts, though; fear and sadness have their purposes. Still, if thinking positively about all this will help, well...that would be great...wouldn't it?
Can too much positive thinking get in the way of making prudent judgments? Has it influenced people's attitudes too much? Could some panic be smarter? Please let me know in your comments.
© Copyright 2008 John D. Mayer
