4. Irrational Despondence
“The attention paid to the Depression
story may seem a logical consequence
of our economic situation. But the
retelling, in fact, is a cause of the
current situation — because the Great
Depression serves as a model for our
expectations, damping what John
Maynard Keynes called our “animal
spirits,” reducing consumers’
willingness to spend and businesses’
willingness to hire and expand. The
Depression narrative could easily end
up as a self-fulfilling prophecy.”
Robert J. Shiller
http://www.nytimes.com/2009/02/22/business/economy/22view.html?_r=2&ref=business
4
Psychology of Recession & Recovery
5. Measuring Consumer Confidence
The ESRI conducts a monthly, nationally representative telephone survey of 1,100
adults aged 18 and over which asks five questions:
Q.1. How do you think the economic situation will develop over the next 12 months?
(get better/stay the same/get worse)
Q.2. Do you think the number of people out of work in the country in the next 12 months will
(increase/remain the same/decrease)?
Q.3. How does the financial situation of your household compare now with what it was 12 months ago?
(got better/stayed the same/got worse)
Q.4. How do you think the financial position of your household will change over the next 12 months?
(get better/stay the same/get worse)
Q.5. In view of the general economic situation at the present time, what do you think about people buying large items such as
furniture, washing machines, TV sets etc. Do you think that for people in general the present time is (good/neither good nor
bad/bad)?
These are used then to derive the three indices as follows:
CSI
CEC
ICE
5
Psychology of Recession & Recovery
15. Pancake Tuesday
Market Cap lost
80% of value
in 24 months
15
Psychology of Recession & Recovery
16. Hysterical Context
X
ISEQ Down -80.3%
16
Psychology of Recession & Recovery
http://dshort.com/charts/bears/four-bears-large.gif
17. Shop ‘til you stop
The contraction in retail
spending is far in excess of
any contraction in incomes
Source: CSO (www.cso.ie)
17
Psychology of Recession & Recovery
18. Shopping Around
Source: National Consumer Agency (www.nca.ie) 18
Psychology of Recession & Recovery
19. Price Comes First
Source: National Consumer Agency (www.nca.ie) 19
Psychology of Recession & Recovery
20. Not So Tough?
Source: Amárach Research consumer survey, February 2009
20
Psychology of Recession & Recovery
21. 3. The Road to Recovery:
prudent optimism
Psychology of Recession & Recovery 21
30. Controlled Confidence
“Yale's Bob Shiller argues that confidence
is the key to getting the economy back on
track. I think a lot of economists would
agree with that. The question is what it
would take to make people more confident.
Bob thinks that confidence would rise if the
government borrowed more and spent
more. Other economists think that
confidence would rise if the government
committed itself to, say, lower taxes on
capital income. The sad truth is that we
economists don't know very much about
what drives the animal spirits of economic
participants. Until we figure it out, it is best
to be suspicious of any policy whose
benefits are supposed to work through the
amorphous channel of quot;confidence.”
Greg Mankiw
30
Psychology of Recession & Recovery http://gregmankiw.blogspot.com/2009/01/shiller-on-animal-spirits.html
31. It’s Only A Recession
31
http://www.heritage.org/Research/Economy/wm2191.cfm
Psychology of Recession & Recovery
32. This is my 4th recession, and I’ve learned that ...
Recessions and Recoveries have one
thing in common: they are usually well
under way before they show up in the
official statistics.
Recessions are macroeconomic
phenomena in the main ... whereas
Recoveries are microeconomic
phenomena.
Psychology of Recession & Recovery 32
33. Recovery 2.0
Recovery 2.0 will be assisted by the Facebook
generation: those 20-35 year olds who are now
experiencing their 'first recession'. They intuit better
than most the potential for the web (including
mobile) to facilitate their personal responses to
recession including:
• Freelancing - if you can't be an employee be a sub-
contractor: better to have lots of bosses (called
clients) because if one lets you go then there are
others to keep you occupied.
• Networking - it's all about who you know: and the
likes of Facebook and LinkedIn make it easier than
ever to get in touch, stay in touch and be connected
with potential customers and suppliers.
• Discovering - using the web to conduct ultra cheap
(even free) research to find out what consumers and
http://www.bizcamp.ie
businesses want, anywhere.
http://geary.ucd.ie/irishrecovery/ • Innovating - innovation has been democratized: the
tools are now available to co-create solutions to a
wider range of problems than ever before.
33
Psychology of Recession & Recovery
34. The big opportunity in
a recession: to remind
people there’s more to
ore
life than economics!
34
Psychology of Recession & Recovery
35. Gerard O’Neill
Executive Chairman – Amárach Research
11 Kingswood Business Centre
Citywest Business Campus
Dublin 24
T. (01) 410 5200
E: gerard.oneill@amarach.com
gerard.oneill@
W: www.amarach.com
B/GON: www.turbulenceahead.com
35
Psychology of Recession & Recovery
36. Appendix: About Amárach
We are Ireland’s largest independent market
research agency, in business since 1989.
We focus on delivering two key benefits to our
clients:
1. Consumer Foresight
– using research to say ‘what next’.
2. Business Insight
– using research to make business decisions.
We provide the full array of market research
services including:
- Quantitative: face-to-face, telephone, web
- Qualitative: focus groups, in-depths, ethnographic
- Field Only: for international & domestic agencies
Register for our free fortnightly eletter
consumerforesight at: www.amarach.com
Read our daily blog:
www.amarachresearch.blogspot.com
Psychology of Recession & Recovery 36