Social Psychology Current Events Essay

1009 Words Dec 13th, 2009 5 Pages
Christen See
Social Psychology: The Economic Recession According to the financial definition, a recession is a significant decline in activity spread across the economy, lasting longer than a few months. It is visible in industrial production, employment, real income, and wholesale-retail trade. The technical indicator of a recession is two consecutive quarters of negative economic growth as measured by a country's GDP. (Dictionary.com) A less official and more realistic definition of an economic recession is the social perception of the state of the economy at a given time. The collective beliefs of the public, mainly businesses and consumers, drive the social perception of whether things are seen as positive or negative. Unfortunately
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The self-fulfilling prophecy is a process where our expectations about someone or something make them act in ways that confirm our expectations. (Newman, Lesson 4) Typically this concept would be applied to how a person’s expectation affects another person. I think that this four step process can be applied with the economy taking the place of the other person. First, there is an expectation that something is going to happen. In this case, when the economy first started to have a down turn there became an expectation in many people’s minds that a recession was sure to happen. Next, this expectation of an imminent recession changes people’s behaviors. The behavior changed in this situation is consumers stop spending money deemed unnecessary. Third, the changed behavior then influences the person or thing initially judged. When consumers cut back on spending, businesses lose profit, expect further decline and in turn lay off employees. Lastly, we see this behavior as proof of our original expectation. The increasing unemployment, closing of businesses and lack of other people spending confirm our original expectation of a recession. Before you know it this original perception error has helped guide the economy directly into a recession. Certain social perception errors help guide our economy in negative ways as previously described. Fortunately, there are also psychological factors that guide individuals solely, that can help move the economy in a positive

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