Is emotional contagion leading worsening the economic problems?

There is a kind of emotional contagion afoot. James H. Fowler, an associate professor at the University of California, San Diego, recently co-wrote a study looking at how happiness can be spread among friends. The opposite is true as well.

“There are studies on bank runs, and it shows that people who know others who have taken their money out of the bank are much more likely to do it as well,” he said. “We always overshoot the upside and, because of the same contagious effects, we overshoot the downside. Everything is fine, and then all of the sudden we are looking for water and supplies to ride out the coming storm.”

from today's NY Times