“Bad metaphors make for bad policy”
So says Paul Krugman in his most recent NYTimes column. “America’s economy isn’t a stalled car, nor is it an invalid who will soon return to health if he gets a bit more rest,” Krugman writes. “Our problems are longer-term than either metaphor implies … The idea that the economic engine is going to catch or the patient rise from his sickbed any day now encourages policy makers to settle for sloppy, short-term measures when the economy really needs well-designed, sustained support.”
Metaphors definitely matter in economics. When describing the stock market, for example, we tend to consistently use specific types of metaphors for specific types of price movements. ‘Agent metaphors’ describe price movements as the deliberate action of a living thing, as in “the NASDAQ climbed higher” or “the Dow fought its way upward.” In contrast, ‘object metaphors’ describe price movements as non-living things subject to external forces, as in “the NASDAQ dropped off a cliff” or “the Dow fell like a brick.”
Psychologist Michael W. Morris and collaborators found that because a metaphor like “the NASDAQ climbed higher” suggests a living thing pursuing a goal, people expect the upward trend to continue. If, for example, house prices are relentlessly described as climbing higher and higher, homeowners might unconsciously assume that the steady ascent is unstoppable. They might feel confident in, say, taking out mortgages they really can’t afford in the expectation that soaring property values will eventually make unsustainable debt look like a smart investment.
Something entirely different is suggested by object metaphors like “the NASDAQ dropped off a cliff.” When something drops off a cliff, it tends to keep falling. And when it hits bottom, it usually remains exactly where it landed. So, if stock prices are described in passive terms as dropping, plunging, or plummeting, investors might be unconsciously prompted into panic selling, imagining that the decline is irreversible. This kind of thinking pushes investors to sell en masse when prices fall, at precisely the time when logic dictates they should be buying since stocks are becoming cheaper.
So handle financial metaphors with care. Even if the economic engine sputters back to life, the road to recovery may turn out to be a dead end…
Blatant self-promotional message:
Want to know more about metaphor? Check out I Is an Other: The Secret Life of Metaphor and How It Shapes the Way We See the World, out on February 8, 2011.