Monday, March 09, 2009

Economic Recovery, Media Coverage, and Hope

Princeton psychologist Daniel Kahneman won a Nobel prize in economics a few years back for his work in Prospect Theory. One of Dr. Kahneman's revolutionary findings was that when individuals make economic decisions, those decisions are 70% emotional. Previous to Kahneman's discovery, economists would theorize that people make their decisions based on their best rational analysis as to what course of action will result in their keeping or acquiring the most money. But that's not the way it works most of the time.

I thought about Dr. Kahneman on Friday when I was having an interesting discussion with an economist about the troubled United States economy and media coverage. She agreed with me that negative media coverage does inhibit economic recovery. When I thought about Dr. Kahneman, I realized why.

We spend because we have a hope that our spending is a good decision. We invest on hope. If media coverage underlines the doom and gloom, then spending and investing will be suppressed.

This line of thinking reminded me of FDR and how optimism and hope was such a crucial aspect of his leadership. Through both the Depression and World War II, FDR always communicated that America would eventually triumph over all obstacles. Obama was communicating a similar optimism this past Saturday when he said, "We will get through this."

Colin Powell has said that optimism is a force multiplier. This is true for the economy and for many - if not all - areas of human endeavor. Dr. Martin Seligman, of the University of Pennsylvania, details the positive results of optimism in his book Learned Optimism. Malcolm Gladwell, in his most recent book Outliers, similarly explains how individuals work longer and harder through difficulties when they believe that the result of their extra effort will be positive. Their hope then drives them to superior accomplishment.

Jesus followers have a firm basis for optimism in a God who loves us and has all power. He alone can give us a peace which "transcends all understanding" (Phil. 4:4-7). In the midst of financial tsunamies, health crises, relational heartbreak, etc., sometimes our only psychological basement - at times the only foundation for our peace - is our knowledge of the character of God.


Bob Sardelli said...

All FDR's optimism couldn't make up for his bad policy. Check out:

The Forgotten Man by Amity Schlaes

or this article:
Imitating Failure

As for Obama's optimistic statements, I find they are too few and far between for this crisis.

Gary Baumgarten said...

The psychological and spiritual impact of the economic downturn will be the topic of News Talk Online on Thursday March 12 at 5 PM New York time. My guests will be NY Mt. Sinai psychiatrist Dr. Elliot Wineburg and Marble Collegiate Church NY senior minister Michael Brown.

Please go to my blog to talk to them.