According to Yale prof Robert J. Shiller, the economic recovery that many people attribute to Wall Street or the stimulus package is based on little more than self-fulfilling prophecy.
The economy is so dependent on the subtle consumer psychology that the type of word we use to describe our situations can make a huge difference.
“Recession,” a kinder, gentler term, began to be used around the time of the 1937-38 contraction to refer to a normal downturn in the business cycle. In January 1938, The Chicago Daily Tribune offered a wry definition of a recession, calling it “a new word for depression, coined by those who don’t like to admit that we’re still in one.”
And apparently, compared to the dastardly depression, a recession is only as bad as a sneeze here and there.
Choice of words can matter greatly for the psychologically aware, and the new word “recession” had a much softer sound than its predecessor. Recessions, as the term came to be used, implied timetables that mark their expected end. Uttering the word does not risk damaging confidence, at least not fundamentally. A diagnosis of a recession can be shrugged off as something from which you will recover, as though your doctor had just diagnosed an illness as a common cold. A depression came to be another matter entirely.
In fact, this idea of a self-fulfilling prophecy has explained many cultural phenomenons throughout American history.
In fact, in 1937, “Think and Grow Rich,” a book by Napoleon Hill, urged readers to adopt a positive mental attitude and to channel the power of the subconscious mind so that real wealth would follow. It became a runaway best seller. Faddish interest had already emerged not only in Freud’s theory of the unconscious mind, but also in the theories of the psychologist Émile Coué, who urged people to recite that “every day in every way I’m getting better and better.” He said this “autosuggestion” would bolster the unconscious self.
So for those of you who were not mumbling a pep talk to yourselves morning and night, there’s no time like the present!