Spooky Theory

Dean Yeager: "Your theories are the worst kind of popular tripe, your methods are sloppy, and your conclusions are highly questionable. You are a poor scientist, Dr Venkman."
Dr Peter Venkman: "I see."
--Ghostbusters

Interesting interview w/ Bob Prechter. Over the past decade, Prechter has been assembling a theory of 'socionomics.'

Socionomics is the study of actions that result from changes in social mood. Essentially, socionomics is about herd behavior and how the herd's direction shifts course from time to time.

We've scribed about this area before, as there may be something socionomics can add to our understanding of economic and social behavior. Theory building in the area is nascent, but papers written in the socionomics domain are gaining broader acceptance and getting published in respected outlets.

One issue I do have with socionomics--at least when it is publicly explained by the likes of Prechter--concerns claims of causality. Prechter et al claim that, per socionomic theory, many cause-effect relationships considered 'truth' by conventional wisdom are actually reversed. For example, rather than asserting that the Great Depression darkened social mood, socionomists suggest that the more appropriate statement is that darkened social mood caused the Great Depression.

There is no empirical evidence that validates such a claim. In part this is because the social mood construct has not been effectively operationalized. Even so, proving causal relationships empirically is an uphill battle.

Conceptual arguments on the causality issue have yet to be convincing either.

I wonder whether systems dynamics might not be at play here. For instance, perhaps darkening social mood prompts more risk averse social action, and risk averse social action prompts darkening social mood. A reinforcing effect, portrayed by Senge's (1990) snowball rolling downhill causal loop diagram, may be present. Increasing the level of one variable increases the level of the other, and the system gradually builds up steam.

Perhaps some exogenous event puts the thing in motion.

My sense is that weaving systems theory into socionomic thought might help better explain how herds get in gear, and why they reverse.

References

Senge, P. 1990. The fifth discipline. New York: Currency Doubleday.