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Everyday Stock Metaphors Can Ruin Trading and Investing Decisions

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The tragic shooting in Arizona this week has raised questions about rhetorical language and how metaphors (especially those used by a certain frisky Alaskan) may or may not influence behavior. "We need to put the guns down. Just as importantly, we need to put the gun metaphors away," said Keith Olbermann.

He may be right, but the author of a new book on the very subject of metaphors cautions against drawing a cause-effect relationship between the single use of a phrase, no matter who said it, and a specific event.

In fact, it's the mundane metaphors used repeatedly that we need to watch out for, says James Geary, author of the forthcoming, "I is an Other: The Secret Life of Metaphor and How It Shapes the Way We See the World".

Speaking to WNYC radio in New York this morning, Geary said that the word choices commonly selected in economic and market reports exemplify the "hidden effect" of metaphorical language. In business stories, stock prices are often described as soaring, climbing, or leaping. They can surge or make a comeback. They recover from crashes. 

"Implicit in those metaphors is the idea that stock prices are living things, that they have a will of their own," says Geary. Research has shown that people who read economic stories stuffed with such phrasing have higher expectations that market prices will continue to rise, he adds.

"It's clear from cognitive science and behavioral research that metaphors influence our behavior and they do that by structuring the way we frame a problem." 

A recent terrific NY Times blog post, "This is Your Brain on Metaphors", also examined this question, asking why metaphors developed in the first place:

We understand that a captain wants more than just hands when he orders all of them on deck. We understand that Kafka’s “Metamorphosis” isn’t really about a cockroach. If we are of a certain theological ilk, we see bread and wine intertwined with body and blood. We grasp that the right piece of cloth can represent a nation and its values, and that setting fire to such a flag is a highly charged act.

...So where did this facility with symbolism come from? It strikes me that the human brain has evolved a necessary shortcut for doing so, and with some major implications.

Consider an animal (including a human) that has started eating some rotten, fetid, disgusting food. As a result, neurons in an area of the brain called the insula will activate. Gustatory disgust. Smell the same awful food, and the insula activates as well. Think about what might count as a disgusting food (say, taking a bite out of a struggling cockroach). Same thing.

Now read in the newspaper about a saintly old widow who had her home foreclosed by a sleazy mortgage company, her medical insurance canceled on flimsy grounds, and got a lousy, exploitative offer at the pawn shop where she tried to hock her kidney dialysis machine. You sit there thinking, those bastards, those people are scum, they’re worse than maggots, they make me want to puke … and your insula activates. Think about something shameful and rotten that you once did … same thing. Not only does the insula “do” sensory disgust; it does moral disgust as well. Because the two are so viscerally similar. When we evolved the capacity to be disgusted by moral failures, we didn’t evolve a new brain region to handle it. Instead, the insula expanded its portfolio.

(The rest of the column, by Stanford biology and neurology professor Robert Sapolsky, looks at the implications for this development.)

Anyone who has ever worked on a news desk knows of the pressure to use active verbs and language that will provoke a visceral response. Another issue: Readers are drawn to similes and emotion (the brain feels rewarded when it decodes a metaphor, say scientists), so it's doubtful that stocks will stop "soaring" any time soon. 
The best we can do is prepare ourselves for the well-placed metaphor just by recognizing them in the first place. As reviewers have said of the message in Geary's book, metaphors aren't just for poets anymore, and their effects make a difference as we buy stocks, go shopping or listen to public debate.

"I is an Other" is due out next month.
POSITION:  No positions in stocks mentioned.