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 there are social perception errors at play, often driven by the media, which influence the confidence to spend and effect the direction the economy will move.
The media affects the public in many different ways. Many people turn to the media for information because they feel that it is a credible and trustworthy source. The media takes advantage of the credibility speaker effect by using dramatic catch phrases and headlines to get people to seek out and pay attention to their information. (Newman, Lesson 8) These dramatic catch phrases often involve fear appeals; persuading people to watch by scaring them into thinking they have information they can not miss. (Newman, Lesson 8) This could be seen in the media before the economy was officially in a recession. Headlines used to get attention influence the public perceptions of what is to come in the future. Most people cannot even begin to understand the complicated workings of the economy, much less be fully informed on the day to day facts of current conditions. Therefore, the availability heuristic, making decisions based on what comes to mind most easily, is often influenced by the information that is read in the morning paper and seen on the evening news. (Newman, Lesson...
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