In this article Harry S. Dent, Jr. states that:
Despite mountains of evidence and historical proof that bubbles inflate and burst all the time . . . we somehow can’t seem to see bubbles when we’re in one.
In behavioral finance, they call this phenomenon the “status quo bias” and it’s just one of the many cognitive biases that makes people naturally bad investors.
You see, most people are awful at predicting the future because they think reality moves in a straight line. That is, they take where they are right now in time and just project out into the future from there.
Gene Epstein, of Barron’s, has referred to Dent’s predictions as “dented” (!), and I have no reason to question Epstein’s assertion. What caught my eye in Dent’s article, however, was his reference to “status quo bias”—a term that I had not encountered before. That encounter led me to do a Google search of the term, which resulted in me finding this article, along with this article, which addressed the question of how “powerful” the bias is. Here are the two concluding paragraphs of the latter article:
When military members are considering their choices as their contract comes to an end, many consider re-enlisting simply because they are unaware of the many opportunities that exist for them. Even when we understand our current path is no longer beneficial or no longer makes us happy, we must still overcome the natural urge to stay on the path unless the alternative is sufficiently attractive. In order for us to readily pursue an alternate path, we must believe that the alternative is clearly superior to the current state of affairs.
The status quo effect is pervasive in both inconsequential and major decisions. Oftentimes we are held back by what we believe to be the safe option, simply because it is the default. Bearing in mind our natural propensity for the status quo will enable us to recognize the allure of inertia and more effectively overcome it.
In learning about this “status quo bias”—and given my recent preoccupation with the threat to our continued existence as a species posed by global warming—I began to wonder if that bias helped explain our USan1, in particular, failure to address this threat in any meaningful way since, e.g., 1988.2
Here’s a definition of the bias:
Status quo bias is an emotional bias; a preference for the current state of affairs. The current baseline (or status quo) is taken as a reference point, and any change from that baseline is perceived as a loss. Status quo bias should be distinguished from a rational preference for the status quo ante, as when the current state of affairs is objectively superior to the available alternatives, or when imperfect information is a significant problem. A large body of evidence, however, shows that status quo bias frequently affects human decision-making.
Status quo bias interacts with other non-rational cognitive processes such as loss aversion, existence bias, endowment effect, longevity, mere exposure, and regret avoidance. Experimental evidence for the detection of status quo bias is seen through the use of the reversal test. A vast amount of experimental and field examples exist. Behavior in regard to retirement plans, health, and ethical choices show evidence of the status quo bias.
Shortly, I will comment on the possibility that “status quo bias” might help explain our failure, adequately, to address the threat posed by global warming, but first some related comments.
In terms of my perspective on the matter, since the early 1980s I have been convinced that our various problems (including the environmental one), as USans, were attributable to the nature of our society; so that the “obvious” solution to our problems was societal system change of the right sort. I therefore developed, and got published, a 5-“wave” strategy for “converting” our society in the proper direction. Because my strategy involved “creative subversion” of the Existing Order, I was convinced that the strategy could be successful.3 Not being an “entrepreneurial” type of person, however—and lacking, besides, the financial means to pursue my “plan”—nothing came of the “plan,” by either me or anyone else (i.e., a reader of the article).
Since 1984 I have continued to “believe in” my strategy—although recently I modified it somewhat (this eBook, p. 26). However, I have also become increasingly conscious of the fact that our country has become an oligarchy, and that that fact has helped me realize two important implications, of that fact, for our society—given, that is, that members of “our” elite don’t give a damn about global warming!4:
- The rich in our society tend not only to be fixated on the short term, but because they control “our” politicians, force “our” politicians to have that same fixation (which says something important about the {lack of} integrity of “our” politicians!).
- The rich, through their control of corporations, also control the media in this country—thereby ensuring that one rarely hears/reads any significant “news” about global warming in the mass media. For example, the lead meteorologist at one of the television stations here in Milwaukee has told me that his management forbids (!) them from talking about global warming—and I assume that this policy prevails not only throughout Milwaukee, but the rest of the country as well!5
What I’m forced to conclude, as I write this essay today (July 29, 2017), is that:
- Although “status quo bias” might be somewhat of a factor in explaining why the global warming threat has not been given serious attention in recent years, the high degree of societal inequality that has characterized our society recently is a more important factor—via the control, by the rich (and large corporations), of “our” politicians and the mass media.
- Had my 1984 “plan” gotten underway in 1984, the “status quo bias” would not have been a factor in limiting its success—for the reasons that (a) the “vanguard” in my “plan” would have consisted of those who were dissatisfied with the status quo, and (b) because the “plan” involved “creative subversion” of the Existing Order, members of the elite, because of their obtuseness:
- Would not have recognized the fact that the Existing Order was being subverted until the Movement had acquired a good “head of steam.”
- Enough of a “head of steam” that the legal structure of this society would have enabled sufficient protection of the Movement to enable it to be
That is a big “What if . . . ,” however! It is certainly presumptuous of me to suggest (as I’ve been hinting here) that had my 1984 “plan” for societal system change been initiated in 1984, it would have met with success—and the human situation would be much better today, and that the threat now posed by global warming would not, now, exist. It’s at least conceivable, however, I would assert.
But whether or not that’s the case, it’s reasonably clear to me that a puppet master has been directing human history since the Neolithic, with the goal of rendering our species extinct (by 2026?!) I agree with Eugene Linden (Affluence and Discontent, 1979) that human history since the Neolithic has been on a downward course6 (see pp. 7 – 14 in this eBook), and would give The Discrepancy as the direct explanation of this. I am aware of no ultimate explanation of this other than the “puppet master” one!
- Given the presumptuousness of residents of the United States referring to themselves as “Americans,” I have gotten in the habit of referring to us as “USans.”
- Noted climate scientist James Hansen addressed the U. S. Senate about this threat in 1988.
- Although I didn’t know this at the time, I now perceive my “macro” solution as complementing Robert Owen’s [1771 – 1858] “micro” solution.
- See this, this, and this—with the latter giving the alleged science behind non-belief in global warming.
- How, I ask, does one decide to continue working as a meteorologist, given this limitation?! Do television meteorologists have no integrity?! How, then, is one able to live with oneself?! I am reminded here of what chief counsel for the U.S. Army Joseph N. Welch said to “my” late Senator Joseph McCarthy: “Have you no sense of decency, sir? At long last, have you left no sense of decency?” I SO ADMIRE Welch for saying that!! I have quoted only part of what Welch said; his entire statement is well worth reading! As to McCarthy: fortunately, “On December 2, 1954 [my future wife’s 12th birthday!], the Senate voted to censure Senator McCarthy by a vote of 67–22, making him one of the few senators ever to be disciplined in this fashion. McCarthy died at Bethesda Naval Hospital in Bethesda, Maryland on May 2, 1957, at the age of 48. The official cause of death was acute hepatitis. Some biographers say this was caused or exacerbated by alcoholism.
- Linden concluded his book with this prediction (p. 178): “We will continue on our present course, and . . . the probability of one or another proposed [earlier in the book] disasters will rapidly increase until some small event triggers the apocalypse of the consumer society.”