Beware of Narratives !

Politics and Economics

Photograph : Eldon Tse

“Narratives” are powerful, it is more than just a story. It dictates our behaviour on something as simple as disliking a political leader or an attraction towards a certain style of clothing, moreover it is people’s opinions or facts becoming viral and normalised.

The sunspot theory is an economic theory that revolves around false narratives (false narratives are lies such as eating breakfast would kill you), but, as trivial it may sound, we are surrounded by false narratives and more often than not embrace them. Ultimately spelling out misleading truths, altering the behaviour of people to act on something that isn’t true.

News, videos and even quarterly reports can become narratives with our ability to morph numbers and news to stories. In life we tend to ignore the opposing side of the story, another person's conflicting opinion and the same is for narratives. If narratives are so clearly flawed, then why do we actively listen to narratives? Because stories give a motive, a clear protagonist and something to fear.

Gamestop, financial crisis and bitcoins are examples of stories single handedly influencing the markets. Bitcoin is the loudest of them all. Bitcoin and others have benefited from developing narratives to draw in profit. In the case of bitcoin the personality of its mysterious founder coupled with the idea of an unregulated currency created just the perfect attention to add to its growing popularity.

However, narratives are not always good. Narratives composed on false information can be cancerous. The danger is that financial markets rarely question if something is right or wrong. News media reporting on false narratives can lead to a global systematic breakdown. For example when news of false narratives are projected onto large screens for the word, it can lead to an escalation of panic. Global crises such as bank default, more recently the running out of toilet paper in the covid-19 pandemic are accelerated or started due to the unnecessary fear led on by narratives.

Narratives dictate behaviour, lead to economic booms and dictate decisions. However the distinction between narratives and facts must be clear if you want to protect yourself against false narratives.