The Journal of Socio-Economics 39 (2010) 127–131

Contents lists available at ScienceDirect

The Journal of Socio-Economics

journal homepage: www.elsevier.com/locate/soceco

The credit crunch: Ideological, psychological and epistemological perspectives

Alan Lewis
University of Bath, Department of Psychology, Claverton Down, Bath BA2 7AY, United Kingdom

a r t i c l e i n f o a b s t r a c t

Article history: Two economic interpretations of the credit crunch are outlined and the question posed whether these are
Received 1 February 2010 incommensurate ideological positions. Psychological perspectives are then explored including insights
Accepted 11 February 2010 from cognitive and social psychology. The argument is made that policy options depend on what consti-
tutes the ‘good society’ and whether the culture of financial institutions can be changed by government
JEL classification: intervention, social pressure and human agency. It is concluded that those interested in socio-economics
G01
have a duty to engage with alternative discourses.
B41
© 2010 Elsevier Inc. All rights reserved.
B59

Keywords:
Financial crisis
Psychological aspects

Economic crises are as inevitable as rain in an English summer;
yet exactly when it is going to rain is irritatingly unpredictable. The
financial problems of 2008 may have features not seen before but
boom and bust cycles have been with us for some time, viz. the tulip
frenzy in 17th Century Holland, the South Seas Bubble of the 18th
Century and the stock market boom and bust of the 1920s. There
seems to be a dimming of collective memory, myopia in the face of
history, where the next cycle takes us completely by surprise.
There is some consensus about the causes of the economic prob-
lems of 2008 and beyond. In a nutshell, financial institutions lent
money they did not have to people who could not pay it back. To
put it more technically, the problem was with ‘leverage’: banks bor-
rowed money to lend to sub-prime mortgagees producing ‘toxic
assets’ as the bubble in the housing market burst and interest rates
went up. With the fall of Lehman Brothers many feared a global
melt-down of financial markets and in September 2008 both the
UK Chancellor of the Exchequer, Alistair Darling, and the French
Finance Minister, Christine Lagarde, described it as the worst finan-
cial crisis since World War II (BBC ‘The Love of Money’ 2009). The
loss of confidence in the banking world meant action had to be
taken. In the US a policy was put to Congress for the state to buy
the toxic assets so that banks could start lending again. With a
US election not far away, Republicans in particular were sceptical
and many voters believed that this form of government interven-
tion was a kind of socialism incompatible with their ‘free market’
principles. The policy was defeated in Congress; consequently the
stock markets fell heavily again. The more radical policy of the state
E-mail address: a.lewis@bath.ac.uk.
becoming the main stockholder of major banks was taken up first by
the Irish government and shortly after by the UK government acting
as guarantors for investors. Effectively the US had little choice but
to follow suit, or risk vast amounts of money flowing to the UK and
Ireland. The truly global nature of capital markets has never before
been made so starkly apparent. Statements from the G20 summit
underlined the importance of nations making decisions of these
kinds in consultation with one another. Eye-catching statements
were also made about the need to curtail greed and inappropriate
bonuses in the financial and banking sectors. Financial legislation
should have sharper teeth so that bankers would not be allowed to
make these kinds of mistakes again. And finally longer-term finan-
cial plans need to be put in place to “build an inclusive, green and
sustainable recovery” (G20, 2009).
While the French President, Nicolas Sarkozy, in a statement in
2008 pronounced that the crisis heralded the end of excessive greed
and laissez-faire economics, the French Finance Minister, Christine
Lagarde, has been more cautious. She has voiced concerns that the
rhetoric of the G20 statements may be empty as very little has yet
been done to control financial excess and she is concerned that the
‘old’ culture of financial institutions will return very rapidly as if
nothing had happened at all (BBC, 2009).
1. Two discourses
Rather surprisingly, given extensive sympathy for ‘free market’
economics, particularly in the US, the following three part discourse
has become the most common one in 2009, i.e. (1) government
intervention is essential in order to secure stability in financial
markets; (2) financial surveillance and financial regulation need

1053-5357/$ – see front matter © 2010 Elsevier Inc. All rights reserved.
doi:10.1016/j.socec.2010.02.015
128 A. Lewis / The Journal of Socio-Economics 39 (2010) 127–131
to be tightened; and (3) key banking actors must be incentivised
differently in order to avoid short-term profits and excessive greed.
A completely difference discourse is presented in an edited book
by Philip Booth (2009), ‘Verdict on the Crash: Causes of Policy Impli-
cations.’ Here the thesis is that the financial crash of 2008 was not
caused by ‘market failure’, rather it was caused by ‘government fail-
ure’. The US government in particular, through a process of ‘social
engineering’, must bear considerable blame, it is argued. Driven by a
policy of inclusion and a belief that home ownership provides both
economic and political stability and a greater chance for poorer peo-
ple to pursue wealth and happiness led to Fannie Mae and Freddie
Mac, with explicit government targets to provide mortgage finance
to poorer households, taking too many risks. Furthermore, financial
regulators have failed to act quickly enough, or in an appropriate
way to avert the crisis; they should therefore not be rewarded for
their inefficiency by having yet more regulatory powers at their
disposal. The authors further argue that serious systemic problems
have not arisen amongst unregulated institutions and that regu-
latory systems encourage complexity and a lack of transparency.
Perhaps most radical of all is the advocacy that banks should be
allowed to fail (albeit in an orderly way).1 This is all reminiscent
of Adam Smith’s ‘invisible’ hand where the natural order of things
should be allowed to return and that bubbles and economic crises
are an integral part of the system; rather like forest fires, where
growth is more vigorous afterwards.
What becomes clear is that economists do not agree with one
another and it is tempting to interpret this as a battle between two
belief systems or ideologies where one group believes that markets
should be left alone to resolve problems naturally as they arise,
where the other believes that government intervention is essential
to correct market failure. Most economists see their discipline as
being guided by the tenets of logical positivism and analytic science,
a central tenet being that analysis should be value free. Yet it is
difficult to see how these competing claims can be resolved by any
kind of empirical test as these belief systems are resistant to change,
comprising, in a Kuhnian sense, incommensurate paradigms.
Faced with the crisis, policy makers had to be seen to be ‘doing
something’, and quickly. So which of the two discourses could
be drawn on? The problem with the non-intervention approach,
invoking the ‘invisible hand’, is that it could easily be seen as ‘doing
nothing’. Research in sociology concerning ‘moral panics’ (Goode,
1994) and ‘attribution theory’ in social psychology (Jaspers et al.,
1983) has convincingly shown that there is a fundamental human
need to take action, to interpret, understand and blame when a
salient event incurs. Politicians know this and had to respond in
order to maintain the support of the electorate. Doing nothing
was not an option politically, as Lawrence Summers, Director of
the White House National Economic Council put it at a speech at
the Brooking Institution about the crisis: “There is room for debate
about how regulation should be enhanced, but not I suggest about
whether we should stay with the status quo,” (p. 15) and “If my
speech was intended to persuade you of one thing, if you didn’t
agree with anything else, it was that this was not a set of economic
processes that would simply automatically fix themselves if you
didn’t act” (p. 37) (Summers, 2009). Politicians and their advisors,
acting in their own interests and the political context of sustaining
popularity, favoured regulation and the bailing out of banks.
2. Individual and cognitive psychology
Much of behavioural economics has been influenced by only one
branch of psychology: cognitive psychology. Cognitive psychology
1
These points are tempered by others which recommend, for instance, enhanced
market disclosures by banks to shareholders.
is dedicated to the study of thinking, reasoning and decision-
making. A considerable literature has now built upon cognitive
psychology and financial decision-making. Attention was drawn
to the studies not only by the pioneering work of Kahneman and
Tversky (1979) but by the ‘Anomalies’ series in the Journal of Eco-
nomic Perspectives by Richard Thaler (1992). The latter took the
broad view that the assumptions of REM are essentially correct but
that people are prone to persistent heuristic biases which need to
be identified and added to the model in order to make it more in
keeping with the empirical world (for some commentators so many
of these ‘anomalies’ have been identified that it is not clear what
one should do with them all, with the feeling, certainly among
some economists, that we might just as well return to REM una-
mended). In contrast Gigerenzer and Selten (2001) have claimed
that far from heuristic biases being exceptions to rationality, they
constitute an ‘adaptive toolbox’ which allows people to make fast
and frugal decisions, which in our animal past may have increased
survival ratios.
Heuristics which may be helpful in one context are unlikely to
apply to all and it seems plausible that some may be maladaptive
in the context of the financial crisis of 2008 and beyond. The idea is
that everyone is prone to maladaptive thinking, including financial
experts and ‘lay’ people. This may help explain a bubble as a signif-
icant number of people making the same errors at the same time
and in the case of ‘herding’ are reassured by the fact that people are
behaving in similar ways.
One aspect of ‘maladaptive thinking’ relevant to the recent
housing bubble is ‘optimum bias’. Moore et al. (1999) reported
an investment experiment with MBA students finding that over-
confidence and false optimism are rife when stocks are rising;
participants were even optimistically biased about past per-
formance. These (and other) findings could be relevant when
understanding bubbles—people get over-optimistic and ‘forget’
past failures.
The optimism bias is probably caused by an illusion of control,
of being better than average. Sutherland (1992) for example has
recorded that 95% of British drivers think they are better than aver-
age. Over-optimistic stock market traders can be less likely to make
a profit (Fenton O’Creery et al., 2003). Furthermore when things are
going well traders tend to attribute success to their own know-how
and expertise: when things go badly there is a strong tendency
to blame things that are beyond the traders’ control. This phe-
nomenon appears to be widespread and is termed in psychology
as ‘the fundamental attribution error’. These individual tenden-
cies are also linked to more social aspects (which will be revisited
later) such as ‘herding’. Given that over-confidence is widespread,
a trader will be perceived by others, including those who make
decisions about bonuses, as behaving conventionally when mak-
ing similar decisions to others (although the traders are still likely
to attribute successes to themselves). Being conventional is also a
defence when profits fall.
There is also evidence for confirmation bias (Wason and
Johnson-Laird, 1972) where when people have an idea in their
heads (and in our case that house prices/stocks will continue to
rise) people have a strong tendency to look for evidence which con-
firms their view, and pay less attention to evidence that does not
fit. There is an enormous amount of financial data which is readily
available and it can be manipulated, to some extent to support a
number of quite contradictory hypotheses.
The money illusion has also probably made things worse as there
is a tendency for people only to consider nominal values. In this case
the profits that people expected from house sales were unrealisti-
cally high as inflation tends to be underestimated. Also all house
prices of course were rising for most people; even after a sale you
still need to buy another house. The money illusion also makes
mortgage loans more attractive.
 A. Lewis / The Journal of Socio-Economics 39 (2010) 127–131
3. Social influences
‘Groupthink’ (Janis, 1982) is a kind of over-confidence at a
social level which can lead to disaster. Janis has characterised the
antecedents of ‘groupthink’ as excessive group cohesiveness, ide-
ological homogeneity and high stress. The symptoms comprise
feelings of invulnerability and a tendency to discredit informa-
tion at odds with the unanimity of the group. According to Janis
these tendencies result in poor decision-making and he has used
them to interpret the 1961 Bay of Pigs fiasco and the 1941
defence of Pearl Harbour; it is also a useful interpretation of highly
stressed and closed-minded financial institutions competing with
one another in a booming market where principal agents become
deaf to news, or warnings that do not fit the powerfully prevail-
ing group view. There is a strong tendency for groups (including
financial experts) to develop a collective ‘wisdom’ which is hard to
shake.
When large numbers of people believe in the same things, for
example that house prices will continue to rise, has been called
the ‘bandwagon effect’ (Leibenstein, 1950; De Bondt and Forbes,
1999). Information signals become homogenised in the investment
community (and elsewhere) and ways of thinking become socially
and professionally shared.
There are a whole host of overlapping theories and approaches
which are relevant including social influence (Festinger, 1954),
social learning (Bandura, 1977) and social dependence. What all
these approaches have in common is the belief that decisions of
all kinds, including financial decisions, are rarely (and perhaps
never) made in isolation. We continually look to others for informa-
tion and verification. These social influences become so powerful
during bubbles that the ‘madness of crowds’ (and the promise of
huge financial gains) can dupe even extremely clever people. Sir
Isaac Newton lost a huge sum when the South Sea Bubble burst
(Schachter et al., 1986). It could be wrong, however, to suggest
that contemporary social psychology unequivocally adheres to the
‘madness of crowds’ thesis. The classic work of Le Bon (1908) based
on descriptions of the crowds during the 19th Century French revo-
lution does indeed describe how when part of an organised crowd
“man descends several rungs on the ladder of civilisation . . .. he
may be a cultivated individual; in a crowd he is a barbarian . . .. a
creature acting by instinct” (p. 12). Attempting to maximise utility
in the form of wealth is probably one such basic instinct. Le Bon
writes that in such situations people lose personal responsibility
for their actions; ideas spread rapidly through a process of conta-
gion. However, Reicher (1984) and Reicher and Potter (1985) show
that crowds can be orderly and engender a positive social identity
and that rather than talking about losing identity and responsibil-
ity it is better to think about ‘changes’ of awareness and behaviour.
It should also be stressed that much of ‘traditional social psychol-
ogy’ stresses that groups are bad for you (e.g. Zimbardo’s Stanford
Prison experiment) but groups can be good for you too, providing
a sense of belonging as well as allowing, in some instances at least,
superior decisions to be made than those made individually. In a
study by Treynor (1987) participants had to guess, on their own,
how many jelly beans were in a jar (there were 850). The aggregate
answer was 871 where only one of the participants (there were 56
of them) did better.
‘Herding’ is a similar concept used in the behavioural finance
literature. When herding occurs people follow the choices made by
others independently from their private information. Also devia-
tion from others may incur reputational costs: according to Hong
et al. (2000) younger portfolio managers are less likely to devi-
ate from the consensus compared to older ones as their reputation
has yet to be made. In an experiment by Cote and Sanders (1997)
participants were asked to predict future returns individually. Sub-
sequently they were supplied with the average predictions of the
129
participants. Participants soon followed the crowd, especially when
reputational motivation was highly pertinent.
4. Psychology used by economists
In his book ‘The sub-prime solution’ Robert Shiller mentions
‘Psychology’ quite a few times yet cites very few studies and
has chosen not to go into any depth (Shiller, 2008). He consid-
ers that there is a ‘psychological’ belief that house prices ‘ought’
to go up, partly based on something like a 14 year run of house
price increases in the US. He then draws on sociology (and, to an
extent, on narrative and discursive psychology, without saying so)
in describing the ‘new era’ of self-reinforcing stories which sus-
tain ‘irrational exuberance’, the stories themselves becoming part
of a social contagion legitimised by the press and financial experts
which are rarely analysed or questioned. ‘Psychology’ appears again
in a persuasive paragraph on page 47: “Psychological, epidemio-
logical and economic theory all point to an environment in which
feedback of enthusiasm for speculative assets, or feedback of price
increases into further price increases, can be expected to produce
speculative bubbles from time to time.”
Akerlof and Shiller (2009) mention the importance of the money
illusion, Keynesian ‘Animal Spirits’ and the role of ‘confidence’ (or
lack of it) in modern macroeconomics. They also reintroduce the
concept of morality to economic thinking as they argue that “the
business cycle is connected to fluctuations in personal commitment
to principles of good behaviour and to fluctuations in predatory
activity, which in turn is related to changes in opportunities for
such activity.” (p. 38). There is a recognition that unprincipled pur-
suit of profit can arise when opportunities present themselves,
when punishments and disincentives are not in evidence and where
‘everybody else is doing it.’ In addition to this there are cultural
shifts in ‘animal spirits’ where unbridled pursuit of self-interest
and aggressively competitive predatory activities compete with
co-operative behaviour as the dominant norm. Akerlof and Shiller
conclude: “Because these cultural changes are difficult to quantify,
and fall outside the field of economics, they are rarely connected
by economists to economic fluctuations. They should be.” (p. 39).
Rapp (2009), drawing heavily on the work of Galbraith (which
links to the mass hysteria model of crowd behaviours, e.g. Le Bon,
1908) asserts that “It is impractical to attempt to outlaw mass finan-
cial euphoria that seems to be imbedded in the human psyche.”
The underlying assumption is that individuals thinking alone are
more intelligent than groups. Greed means we have short memo-
ries and ignore history. Momentum buying is generated by greed
which ignores the original stimulus for the boom, where real value
becomes irrelevant.
That economists should want to include aspects of psychol-
ogy in their writings is welcome news to psychologists, who have
been pressing for this for quite some time. Consistent findings
from experimental studies in cognitive psychology may well be
of considerable use in microeconomics. The more broad-brush
approach of macroeconomics (including speculations about the
credit crunch) draws more commonly, and rather loosely in com-
parison, from approaches in social psychology and sociology. In
addition some economists, notably Keynes and Galbraith, make
bold claims about human motives and the human condition from
which most psychologists would shy away. For this liaison to con-
tinue to be productive there is a case for attempting to identify
empirically and quantify ‘animal spirits’ and, more generally, the
epistemological status of these assertions. Akerlof and Shiller’s
idea that there are cultural shifts between periods where unfet-
tered self-interest dominates over co-operative behaviour and vice
versa recommends that ‘animal spirits’ are not fixed like biologi-
cal instincts. It also suggests that we need not always be enslaved
130 A. Lewis / The Journal of Socio-Economics 39 (2010) 127–131
by our ‘irrational exuberances’. In a light-hearted fashion Akerlof
and Shiller use the popularity of poker over contract bridge as a
proxy for recent cultural shifts. Something more tangible would be
possible like tracing charitable giving or changes in attitudes and
values measured by international social surveys over time (Jones
et al., 1998).
5. The good society, culture and human agency
One way of elaborating on Akerlof and Shiller’s note on cultural
shifts is to consider two versions of the ‘good society’. The first
version, perhaps the dominant one, can be summarised by the list
of features below:
• A belief that individuals, acting alone and following their own
self-interest, in the world of finance and elsewhere, provide ben-
efits for society. Government ‘intervention’ should be kept to a
minimum and, in the ideal world, removed altogether.
• ‘Rational Economic Man’ is a pretty accurate depiction of human
nature which should inform policy.
• The sole responsibility of business is to maximise profits for
shareholders.
• Materialism, egoism and the pursuit of wealth are laudable per-
sonal values which lead to happiness.
The second version of the good society can be depicted as fol-
lows:
• The government should act as a ‘benevolent dictator’, correcting
market failure.
• Alternative models of man, including the recognition of implicit
as well as explicit motivations, should inform policy.
• Business should be socially responsible.
• Post-materialism, concern for others and the pursuit of wellbeing
are laudable personal values which lead to happiness.
It would be foolish perhaps to believe that only the first or
the second version should dominate exclusively as some kind of
balance needs to be struck between them, e.g. the pursuit of self-
interest may be essential for the working of efficient markets but
not when self-interest mutates into unbridled greed. Neither is
society homogenous: it would not do if everyone was a wealth max-
imiser as we need people in the caring professions, in health and
education as well. However there is an argument that too much
emphasis has been placed on the first model in recent years at the
expense of the second and that predominance of the first model is
partly to blame for the current crisis.
Within financial institutions the first model is pervasive and
is underpinned by traditionally masculine and conservative value
systems. New recruits have to learn the language and accept the
culture quickly if they are to survive (Juravle and Lewis, 2009).
For Guyatt (2008, 2009), when considering institutional investors,
there are three characteristics of organisational culture which are
unhelpful, namely lack of social responsibility, short-termism and
conventional thinking. There is some evidence that socially respon-
sible investing (SRI) is growing due to changes in preferences and
value systems, the influence of market innovators and a degree
of pushing from governments (Lewis, 2002). It is still a minority
interest. Where there are socially responsible experts ‘in-house’
they are usually involved in supplying information to those who
finally make the relevant decisions (who are less likely to be sym-
pathetic to these ‘intangible’ concerns themselves) (Juravle and
Lewis, 2008; Lewis and Juravle, in press). Most fund managers have
short-term horizons and are remunerated accordingly. This works
against SRI which is best suited to longer-term returns. Actors are
unwilling to be out of step with others who are ‘trading’ rather
than ‘investing’. These are also governed by long-held cultural and
social expectations and conventions, which include how financial
markets work, the convention of reviewing fund manager perfor-
mance over short periods and concentrating on ‘tangible’ financial
criteria (SRI criteria are viewed as ‘intangible’). Juravle and Lewis
(2008) have followed up Guyatt’s research, revealing that there are
impediments to change at individual, organisational and institu-
tional levels.
Some hope comes in the form of human agency and the role
of SRI ‘champions’ (Juravle and Lewis, 2009; Lewis and Juravle, in
press). These champions recognise that SRI faces powerful imped-
iments as, for instance, SRI is considered to be unconventional
and when SRI out-performs conventional funds the establishment
tends to deride them. One interviewee made it plain that some
mainstream fund managers think of SRI advocates as ‘love-in,
bearded, sandal-wearing, tree-hugging and teetotal vegetarians’.
However, there have been some successes in introducing 3-year
rolling performance indicators to combat short-termism. SRI advo-
cates have learned to share the narratives and language of the
City and have fought their corner arguing that SRI is ‘material’
rather than ‘immaterial’, ‘financial’ rather than ‘extra-financial’.
Their acceptance has been aided by EU trading schemes which
price externalities; the UN Principles for Responsible Investment,
the Carbon Disclosure Project and the Enhanced Analytics Initia-
tive. In short they have succeeded not by trying to make financial
institutions more moral but by making the case for SRI in a language
that can be understood.
6. Conclusions and speculations
How the credit crunch came about and what to do about it is con-
tested within the discipline of economics. Two camps have been
identified: one which supports the current policy of government
‘intervention’ and the second which (with caveats) believes that
banks should have been allowed to fail. While the discipline of eco-
nomics prides itself in its adherence to positivism, the case is made
that the two positions are ideologically driven. Furthermore it is dif-
ficult to imagine any empirical test which would help in choosing
between these competing schools of economic thought.
Socio-economics would do well to recognise that these debates
are not purely technical matters where it can be demonstrated
which interpretation is correct and which is not. Drawing from
The Sociology of Scientific Knowledge literature (Mulkay, 1985)
it is more useful to view the pursuit of scientific progress as a
continuing battle between advocates, in the press, in books and
scientific journals, conferences or wherever debates take place.
The prize is to gain the upper hand where the legitimacy of
the favoured explanation becomes difficult to challenge, or bet-
ter still becomes culturally embedded and implicit. There is no
static technical matrix to be filled in whether it is research in main-
stream economics, behavioural, social or experimental economics.
Socio-economics should embrace the notion that knowledge is
continually contested and there is merit in analysing competing
discourses and the claims that are made.
Some of the psychological perspectives drawn on in this paper
are not ideologically neutral either as it has been advocated that
morals and values are central to any comprehensive interpretation
of the credit crunch and policies to alleviate it. These morals and val-
ues have been considered on two levels: the level of society, and the
specific culture of financial institutions. It has been argued, in the
two versions of the ‘good society’, that a balance needs to be struck
between the two but that in recent times too much emphasis has
been placed on naked self-interest and wealth maximisation at the
expense of social responsibility. This view is repeated in the context
 A. Lewis / The Journal of Socio-Economics 39 (2010) 127–131
of the culture of financial institutions, where long-term incentives
are recommended and conventional thinking challenged.
As this article goes to press Lord Myers, The U.K.’s City Minister
is calling for the major banks to curb salaries and bonuses. In the
U.K. around £74 billion of taxpayers money has been used to prop
up the banks yet just 1 year after the near collapse of the financial
system at least 5000 bankers will be paid more than a £1 million
in bonuses and salaries in 2009/10 (The Daily Telegraph, 2009a).
The French Finance Minister, Christine Lagarde has so far proven to
be right in her prediction that the excesses of financial institutions
and the arrogance of bankers will quickly return (BBC, 2009).
How can change be achieved? In Britain the Financial Services
Authority (FSA) has announced that it plans to ban large cash
bonuses for bank employees. The FSA recommends that where
large profits are made they should be used instead to build up
capital (Daily Telegraph, 2009b). ‘Let’s stop teaching greed’ in busi-
ness schools has become a clarion call (Cory and Lynne, 2009).
On a more temperate note Rötheli (2009) has argued that gov-
ernment intervention should lead to greater transparency, that
financial analysts need to be trained differently, including training
in ‘bubble-detection’, encouraging a ‘safety culture’, rather than a
high risk, short-term gain culture.
It is plausible that improvements can be made through edu-
cation, training and government intervention of various kinds but
financial institutions must be encouraged to change themselves.
This may require sympathy and action from senior management
but it also provides an opportunity for individual agency, espe-
cially those in socially responsible investment teams. The interplay
between individual self-identity and social-structural factors is
complex (Giddens, 1991) yet the credit crunch has given peo-
ple the opportunity to re-evaluate themselves. If inappropriate
self-interest is legitimised by the society around one it becomes
natural to behave in such a way. It follows that if these motives
become questioned in the media, in talk and in social practices,
the emergence of alternative selves may be possible. It should be
the responsibility of all of us, whether it be in policy discussions or
academic work, to keep alternative discourses of the ‘good society’
alive.
References
Akerlof, G., Shiller, R., 2009. Animal Spirits: How Human Psychology Drives the
Economy and Why it Matters for Global Capitalism. Princeton University Press,
Princeton, NJ.
Bandura, A., 1977. Social Learning Theory. Prentice-Hall, Englewood Cliffs, NJ.
BBC, 2009. The Love of Money. http://www.bbc.co.uk/programmes/boomqnjs
(accessed 01.10.09).
Booth, P. (Ed.), 2009. Verdict on the Crash: Causes and Policy Implications. IEA,
London.
Cory, G., Lynne, G., 2009. Let’s stop teaching greed. IAREP/SABE conference paper,
Nova Scotia, Canada.
Cote, J., Sanders, D., 1997. Herding Behaviour: Explanations & Implications.
Behavioural Research & Accounting 9, 20–45.
Daily Telegraph, 2009a. 03.12.09. Page 1.
Daily Telegraph, 2009b. Business Section. 23.11.09. Page 1.
131
De Bondt, W., Forbes, W., 1999. Herding in analyst earnings forecasts: evidence from
the United Kingdom. European Financial Management 5 (2), 141–163.
Fenton O’Creery, M., Nicholson, N., Soane, E., Willman, P., 2003. Trading on illu-
sions: unrealistic perceptions of control and trading performance. Journal of
Occupational & Organizational Psychology 76 (1), 53–68.
Festinger, L., 1954. A theory of social comparison processes. Human Relations 7,
117–140.
G.20, 2009. G20 Summit London. http://www.londonsummit.gov.uk/en/summit-
aims/summit-communique/ (accessed 04.11.09).
Giddens, A., 1991. Modernity & Self-Identity. Stanford University Press, Stanford, CA.
Gigerenzer, G., Selten, R. (Eds.), 2001. Bounded Rationality: The Adaptive Toolbox.
MIT Press, Cambridge, MA.
Goode, E., 1994. Moral Panic: The Social Construction of Deviance. Blackwell, Oxford.
Guyatt, D., 2008. Corporate social responsibility. In: Lewis, A. (Ed.), Psychology &
Economic Behaviour. Cambridge University Press, Cambridge, UK.
Guyatt, D., 2009. Beyond the Credit Crisis: The Role of Pension Funds.
http://www.mercer.com/referencecontent.htm?idContent=1332305 (accessed
03.09.09).
Hong, H., Kubik, J., Solomon, A., 2000. Security analysts’ career concerns & herding
of earnings forecasts. Rand Journal of Economics 31 (1), 121–144.
Janis, I., 1982. Groupthink. Houghton Mifflin, Boston, MA.
Jaspers, J., Fincham, F., Hewstone, M. (Eds.), 1983. Attribution Theory & Research.
European Monographs in Social Psychology.
Jones, P., Cullis, J., Lewis, A., 1998. Public versus private provision for altruism. Kyklos
51, 3–24.
Juravle, C., Lewis, A., 2008. Identifying impediments to SRI in Europe: a review of
the practitioner and academic literature. Business Ethics: A European Review
17 (3), 285–310.
Juravle, C., Lewis, A., 2009. The role of championship in the mainstreaming of SI:
what can we learn from SI pioneers in the UK? Organization & Environment 22
(1), 75–98.
Kahneman, D., Tversky, A., 1979. Prospect theory, an analysis of decision making
under risk. Econometrica 47, 263–291.
Le Bon, G., 1908. The Crowd: A Study of the Popular Mind. Unwin, London.
Leibenstein, H., 1950. Bandwagon, snob & Veblen effects in the theory of consumers’
demand. Quarterly Journal of Economics 64 (2), 183–207.
Lewis, A., 2002. Morals, Markets & Money: Ethical, Green & Socially Responsible
Investing. Pearson Education, London.
Lewis, A., Juravle, C., in press. Morals, markets & money: a qualitative
study of ‘champions’. Journal of Business Ethics. Published online at
http://springerlink.com/content/x3kn314014w22h37/.
Moore, D., Kurtzberg, T., Fox, C., Bazelman, M., 1999. Positive illusions and forecasting
errors in mutual fund investment decisions. Organizational Behaviour & Human
Decision Processes 79, 95–114.
Mulkay, M., 1985. Science & The Sociology of Knowledge. Allen & Unwin, London.
Rapp, D., 2009. Bubbles, Booms & Busts: The Rise & Fall of Financial Assets. Springer,
New York.
Reicher, S., 1984. Social influence in the crowd: attitudinal & behavioural effects of
deindividuation in conditions of high & low group salience. British Journal of
Social Psychology 23, 341–350.
Reicher, S., Potter, J., 1985. Psychological theory as intergroup perspective: a compar-
ative analysis of ‘scientific’ and ‘lay’ accounts of crowd events. Human Relations
38, 167–189.
Rötheli, T., 2009. Risk misperception & banks’ herd behaviour as causes of the finan-
cial crisis. IAREP/SABE conference paper, Nova Scotia, Canada.
Schachter, S., Hood, D., Andreassen, P., Gerin, W., 1986. Aggregate variables in psy-
chology & economics: dependence & the stock market. In: Gilad, B., Kaish, S.
(Eds.), Handbook of Behavioral Economics, vol. B. JAI Press, Greenwich, CT.
Shiller, R., 2008. The Sub-Prime Solution. Princeton University Press, Princeton, NJ.
Summers, L., 2009. Responding to an Historic Economic Crisis: The Obama Program.
The Brookings Institution, Washington DC.
Sutherland, N., 1992. Irrationality: The Enemy Within. Penguin, Harmondsworth.
Thaler, R., 1992. The Winner’s Curse. Princeton University Press, Princeton, NJ.
Treynor, J., 1987. Market efficiency & the bean jar experiment. Financial Analysts
Journal 43, 50–53.
Wason, P., Johnson-Laird, P., 1972. The Psychology of Reasoning. Batsford, London.
Zimbardo, P., 2009. http://www.prisonexp.org/ (accessed 14.11.09).