Monday, March 2, 2009

A Psychological Recovery

I gave the following presentation to the UCD Geary Institute earlier today. They're a good crew and had lots of interesting comments and ideas on the contents afterwards. One in particular struck me: will the collapse in pension funds drive Ireland's savings ratio to a new, higher equilibrium level (like in Japan/China/Italy)? The savings ratio is certainly rising, and pension funds are certainly falling.

Which is why the assumption that the Irish government can increase income taxes without impacting consumer spending due to consumers simply spending their savings instead (as suggested here) might just be a tad heroic.

Have a look - let me know what you think:

Psychology Of Recession And Recovery March 2009
Posted by at Monday, March 02, 2009

2 comments:

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  2. Hi Gerard, I really enjoyed the presentation. I was particularly intriqued by the statistics on optimism and pessimism and the link to intimacy.

    Last year in an article entitled 'From terror to joy' psychologists showed that after people think of death they show an automatic (unconscious) tendency to seek out positive information in their environment. In one expriment, after people thought about death they completed word stems with positive rather than negative information (e.g. h_ _ _ _ finished as 'happy' not 'hurry'). Although the economic downturn isn't exactly equivalent to death (though I have heard comparisons!) the same principle applies in how people respond to anxious situations.

    This sudden magnetic appeal of positive information seems like an adaptive tendency that most people have in uncertain times. Asking about intimacy seems to be trying to tap this as we are often not consciously aware of the tendency so can't really report on changes in this.

    I read that at the moment according to the ideas campaign (launched on prime time tonight) more than 4 out of 5 people think we should focus on the positive ideas and getting the economy back on its feet. Looking at the figures on consumer confidence and how the contraction in spending is disproportionate to the loss in income it's tempting to ask is our search for a silver bullet our only real silver bullet. Capitalising on this enhanced implicit pursuit for the positive may be one way marketers and businesses can help stimulate spending.
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