Minding the Markets: Emotional Finance and Financial Instability
We recently hosted a New Era Economics seminar with influential professor David Tuckett, to discuss his new theory termed 'emotional finance' to explain financial market behaviour.
During the seminar, Professor Tuckett described his main findings based on 50 in depth interviews with fund managers, offering a deeper understanding of financial markets and investor behaviour.
Professor Tuckett discussed how markets unleash emotional responses, and he found that human emotions, storytelling and conflicts are at the heart of finance and must be acknowledged as part of their decision making process. He stressed how decisions are made in a state of uncertainty, where information is weaved into a narrative in order to come to certain decisions.
This leads to emotion being a motive in taking risks, where people often find themselves experiencing what he terms ‘divided states’, and ‘group feel’ and creating ‘phantastic objects’. This he says is what was experienced during the financial crisis: individuals perceived financial derivatives as phantastic objects, which led to divided emotional states and group feel, which eventually led to the financial crisis.
David Tuckett is a Fellow of the Institute of Psychoanalysis in London and Professor at University College London. His latest book, Minding the Markets, sets out a new theory – emotional finance – to explain financial market behaviour and the development of bubbles in asset prices in particular. Based on interviews with over 50 fund managers, Professor Tuckett shows how unconscious needs and fears, the influence of groups and the nature of uncertainty are crucial determinants of investment activity.
At this seminar, Professor Tuckett will describe some of the main findings of his research and set out the types of policy that are needed to make financial markets more stable.
Richard Saunders, Chief Executive of the Investment Managers Association (IMA), provided an initial response to Professor Tuckett before the meeting opened up for questions and discussion.
The seminar was chaired by Philip Coggan, the Buttonwood columnist of the Economist.
You may be interested in...
IPPR in the news
Exam fail kids are facing jobs woe
The Sun - 15 May 2013Will Ed Miliband be the Doctor Who of politics?
The Telegraph - 14 May 2013Labour will not be able to meet child poverty targets, says thinktank chief
The Guardian - 13 May 2013Slave-to-work dads ‘being squeezed out of family life,' says MP Jon Cruddas
Manchester Evening News - 13 May 2013
Laptop U: Has the future of college moved online?
The New Yorker - 13 May 2013Ed Cox on 'two-speed Britain'
Observer - 12 May 2013Francis Maude to consider fixed terms for top mandarins
Financial Times (£) - 12 May 2013Childcare reforms in chaos
Daily Mirror - 10 May 2013
Sarah Mulley on the Queen's speech (2 mins 55s)
Channel 4 News - 09 May 2013Queen's Speech 2013: Economist Attacks Immigration Curbs
Huffington Post - 09 May 2013Follow Macmillan and build, build, build
New Statesman - 08 May 2013School inspections deeply toxic, thinktank says
The Guardian - 08 May 2013
School League Tables Damaging To Students' Vocational Education, Warns IPPR
Huffington Post - 08 May 2013A common sense policy to create jobs and combat what ails Britain
The Independent - 07 May 2013250,000 children could suffer due to league table changes
The Telegraph - 07 May 2013Tories braced for big losses in council polls
The Guardian - 03 May 2013
Guy Lodge on compulsory voting (47 mins)
BBC Radio 4 PM - 30 Apr 2013Cut aid and NHS cash, George Osborne told
The Telegraph - 30 Apr 2013Is the internet making universities defunct?
The Telegraph - 30 Apr 2013Make young vote to counter pensioners' power
The Telegraph - 29 Apr 2013