Has it ever occurred to you that an online piece mentioning an imminent market crash is way more tempting to click on than an article stating that a diversified portfolio has a strong probability of delivering high single-digit returns over decades? The second one sounds pretty boring, right? On the other hand, clicking on the first is hard to resist. This tendency is completely normal, and every news outlet and social media company knows it. As a matter of fact, their business model depends on human beings continuing to act as such.
Negative news sells primarily because it taps into certain psychological and sociological aspects of human behavior. Here are several reasons why we feel drawn to bleak tidings.
1. Emotional response: Negative news often elicits stronger emotional responses from viewers or readers than positive news. Stories about conflict, tragedy, or injustice provoke feelings of fear, anger, sadness, or outrage, which can captivate and engage audiences. Many millennia ago, this human response was likely critical for our survival as a species because it prepared us for threats.
2. Evolutionary bias: Humans have evolved to pay more attention to potential threats and dangers in their environment. This evolutionary bias, often referred to as the negativity bias, makes negative information more salient and memorable compared to positive or neutral information. As a result, negative news tends to grab our attention more easily.
3. Confirmation bias: Individuals may be more likely to seek out or consume news that aligns with their established beliefs or worldviews. Negative stories that confirm existing fears or biases may be particularly appealing to certain audiences, reinforcing their
perceptions of the world.
4. Social comparison: Negative news stories often involve comparisons between individuals or groups, highlighting disparities in wealth, power, or privilege. This can trigger feelings of superiority or schadenfreude in some readers or viewers, leading them to consume such content.
5. Media agenda and profit motives: Media organizations may prioritize negative news coverage because it is perceived as more newsworthy or attention grabbing. Additionally, sensational or negative stories may be more profitable for media outlets as they tend to attract more views, clicks, or advertising revenue. This is not meant to disparage media companies – they are for-profit entities trying to create value for their shareholders. However, it is important for consumers to be aware that these organizations are not trying to help them make smart financial decisions. That is not their goal; their goal is to rake in advertising dollars, and clicks help them do so. (By the way, an independent financial advisor is the one trying to help you make smart fiscal choices, and they stay in
business by providing valuable advice. Promoting a disaster “dujour” is counter-productive for all parties.)
6. Psychological impact: Constant exposure to negative news can have psychological effects such as increased anxiety, stress, or feelings of helplessness. Despite these potential adverse consequences, people may still be drawn to negative news due to its perceived relevance or importance. For investors, sometimes the anxiety accompanying a bear market does not have to do with the actual reduction in a portfolio’s value, but the perceived destruction of all markets caused by trending news.
While negative news may dominate headlines, it is essential to recognize that it does not represent the entirety of the human experience. Positive and uplifting stories also exist, but they may not always receive the same level of attention from media outlets or audiences. Being aware of these biases can help individuals make more informed choices about the content they consume and realize its potential impact on their well-being. We are not necessarily recommending a “bury your head in the sand” strategy – we are merely attempting to explain to our clients why there will always be a story about an impending disaster. Simply put, it sells very well. Even though I have been doing this for 25 years, I also get tempted to click on a piece where some “expert” declares that the market is crashing tomorrow for whatever reason.
– JASON PRINT, CFP®
Co-President & CEO
