Fads And Norms: Young Fogeys and Old Hep-Cats.
KINDLEBERGER, CHARLES P.
The American public has increasingly become outer-directed where it used to be inner-directed, says David Riesman in The Lonely Crowd. Inner-directed means something like holding independent tastes and rational decision-making abilities, although it sometimes involves internalizing a mind and spirit from an earlier outer-direction. Outer-directed activity I initially equated with herd behavior and fads like the hoola-hoop, pogo-sticks, and Beanie babies, or in the world of finance and economics, with the waves of interest for conglomerates, mergers and acquisitions, initial public offerings, domestic mutual funds, foreign mutual funds, foreign funds specializing in emerging markets, index funds, hedge funds, junk bonds, and so on.
Fads differ among income groups and social classes. But they also change within a class. Tennis is losing out to golf, and canoeing to kayaking. As football players get bigger, smaller athletes shift to soccer and lacrosse. Change is related to age, as the bromide about old dogs suggests. Really mature people write by hand or type mechanically rather than use a word processor. They use human tellers at banks and not automated teller machines. A young Japanese man came into my study not long ago, saw my Royal office typewriter, and asked whether he could take a picture of it. He was permitted, but whether he hoped to capture the technological obsolescence of some American citizens, or for archeological curiosity, I did not learn.
To call social and technological change faddish is, to be sure, invidious. This is evident in Peter Posner's Law and Social Norms, reviewed recently by Peter Berkowitz in The New Republic. The theme in Posner's book is that exemplary social behavior is enforced not by law, but by pressures to conform to norms, both in general and of the group to which one belongs. A number of economists have observed that honesty in trade is promoted by the desire to earn a reputation for fair dealing. Political scientists debate rational choice in instances such as voting: Since almost no elections are decided by one vote, it is irrational to vote to achieve a given result, but voting is the norm of good citizenship.
The lines separating fads, norms, and rational choices are hard to draw. Have most people over, say 25, given up smoking in the last couple of decades for health, or because society gradually frowned on the practice?
Career choices move in waves. Law is losing out to consulting. There are fields where DNA determines career choice -- medicine, science, music, and engineering (the last children, who take apart and put together again, in my day, radios and clocks). Much choice is guided by the outer words -- parents (whether positively or negatively), charismatic teachers, or the world around us. Recruitment into economics used to be counter-cyclical, especially attracting those who became giants in the Depression.
Once a person has chosen economics, there is still some faddism. Monetarism, Keynesianism, pure theory, econometrics, and even economic history started as nuclei and spread through contagion. The literature on the spread of Keynesianism from England to the United States is full and rich, dividing the glory or blame among individuals (such as Alvin Hansen), circumstances (the Depression), and the receptivity of the young (students) searching for a faith. Not many convert; in discussing Thomas Malthus, Walter Bagehot wrote that few who grab hold of an original idea ever give it up.
When does a person resist new fads -- clinging to dealing with bank tellers instead of ATMs (despite waiting in line), holding back from the hit movies, TV shows, best-selling novels -- becoming inner-directed and hanging on to outmoded fads. Is it only age-related, and if so, does it happen at 60, 70, 80? There are young fogeys and old hep-cats, I am told. But on average? And where?
Charles P. Kindleberger is Professor Emeritus at MIT.
