Economic models work within the normal operating levels of human emotions with most people being within the 80% - 90% normal emotional stability. Those people who are less rational, living in a state of panic or exuberance, are not significant enough to significantly influence the emotional swings of larger populations.
Figure 1: Emotional Normal Population Distribution
So we have 80%-90% of the economic population operating rationally and generating wealth within good and poor cycles.
Figure 2: Emotionally Normal GDP Growth Curve
Under normal emotional conditions most economic models work as the behaviour is rational.
When the rational distribution of the population’s emotions is altered, their economic nature alters. What was their normal status no longer exists. A different emotional status now exists. This is frequently mirrored in the problematic history of Government policy changes not achieving what was planned. This is because the implementation may adequately change a population’s attitude to eliminate their original emotional status and create a new emotional status and a different socio-economic outcome arises to what was anticipated.
Figure 3: Cessation of an Emotionally Stable Population
As a population takes an emotional excursion we immediately see that the population has a diminished rationality.
Figure 4: Exuberant Emotional Excursion of Population
Figure 5: Panic Emotional Excursion of Population
It becomes chronically difficult to work with populations that shift outside the bounds of normal behaviour. Existing models falter and the prediction of behaviour becomes very short term and unreliable.
Societies should not be departing from their normal emotional range, but they do, generating unusual stresses. A deeper understanding of how contributing societies interrelate, what their triggers are and how they react would help to prop up modern socio-economic models.
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