The 'wisdom' of crowds

Crowdsourcing and mass thought is all the rage, but there's a risk involved in following the common ruck.

Crowdsourcing and mass thought is all the rage, but there's a risk involved in following the common ruck.

mike hutcheson idealog democritusWhat the crowd calls for eventually becomes the law.

In grasping the significance of this, it’s worth reflecting on how ideas can catch on and why trends start. The behaviour of crowds is a fascinating subject. Personally I don’t much like them. To paraphrase Will Rogers:
“I never met a man I didn’t like, but never met a crowd I did.” Crowds are fickle and can quickly become mindless mobs.

Extraordinary Popular Delusions and the Madness of Crowds, by Rev Charles Mackay, LLD, was written about 160 years ago but is still as relevant as the day it was published. For instance, if you thought investment greed was a new phenomenon, this book will dissuade you.

The preface opens: “The object in the following pages has been to collect the most remarkable instances of those moral epidemics which have been excited, sometimes by one cause and sometimes by another, and to show how easily the masses have been led astray, and how imitative and gregarious men are, even in their infatuations and crimes.”

The author goes on to discuss and dissect such diverse topics as the South Sea Bubble of the 1720s, medieval witch mania, the folly of the Crusades, fallacious prophecies and false prophets, phony fortune-tellers and astrologers, particularly the beguiling ambiguity of Nostradamus’ predictions.

Of special note is Tulipomania in 17th century Holland. The unseemly rush to acquire tulip bulbs 360 years ago has been echoed in other forms many times since, most notably the surge and shatter cycles of stock markets in the 20th century and rampant bloating and bursting of financial markets in more recent times.

Tulipomania became endemic around 1634, when it was deemed proof of bad taste for a gentleman not to have a collection of tulips. People were known to pay as much as 100,000 florins for 40 bulbs. (By comparison, a sheep was worth 10 florins and a silver drinking cup, 60 florins.) At the end of 1636 it was all over. Purchasers reneged, debtors defaulted. The courts were asked to rule on contracts for sale and purchase, but ducked the issue by saying that investment in tulips was a gamble and gambling debts were unenforceable. The Dutch economy took a long time to recover from the ensuing losses. Sound familiar?

More recently, some thoughtful writers have examined the whys and wherefores of boom-and-bust investment cycles or the reasons why teenagers take up smoking despite the increasingly vociferous anti- smoking lobby and the overwhelming medical evidence against it. (I’ll give you a clue: read ‘in spite’ rather than ‘despite’). Fascinating insights into crowd behaviour come in The Tipping Point, by Malcolm Gladwell. He examines why changes in our society can happen so suddenly and unexpectedly. Trends, fads and the popularity of products can spread like outbreaks of infectious disease. “Just as a single sick person can start an epidemic of the flu, so too can a few fare-beaters and graffiti artists fuel a subway crime wave, or a satisfied customer fill the empty tables of a new restaurant. These are social epidemics, and the moment when they take off, when they reach their critical mass, is the Tipping Point.”

Gladwell identifies particular personality types: Connectors — influential souls who have lots of acquaintances; mavens — who know what’s hot, what’s not and where to go for a deal, and finally, salesmen — who spread the word and are able to convince others to buy into a concept or product. These are the people who instigate trends and popularise ideas. Understanding who they are and how they sprinkle their pixie dust helps us make sense of the world we live in — providing, as it does, insights into who can actually make ideas stick and why.

A third book I found to be just as intriguing. It’s called Critical Mass — How One Thing Leads To Another, by Philip Ball. The author’s insight is that laws of sociology and laws of physics are closely linked. In other words, the behaviour of people en masse and that of molecular particles under certain conditions can be mapped and predicted – even when there is no guiding hand or predetermined collective objective. Random crowd behaviour, such as traffic snarls or pedestrian movement, has been shown to mirror computer modelling and vice versa. Some things are inevitable and predictable – it’s just the way life is. This reinforces the idea that while good things can occur spontaneously, they can go bad just as quickly.

When it comes to human behaviour and exemplars to follow we just have to hope there are more Ed Hillarys in the world than there are Rod Petricevics.

Mike Hutcheson is a former Saatchi & Saatchi grand fromage, a director of Image Centre, and a rose among a crowd of thorns.

Idealog has been covering the most interesting people, businesses and issues from the fields of innovation, design, technology and urban development for over 12 years. And we're asking for your support so we can keep telling those stories, inspire more entrepreneurs to start their own businesses and keep pushing New Zealand forward. Give over $5 a month and you will not only be supporting New Zealand innovation, but you’ll also receive a print subscription, an Idealog t-shirt and a copy of the new book by David Downs and Dr. Michelle Dickinson, No. 8 Recharged (while stocks last).