How Supermodels Are Like Toxic Assets
The secrets to Coco’s success, and the dozens of girls that have come before and will surely come after her, have much less to do with Coco the person (or the body) than with the social context of an unstable market. There is very little intrinsic value in Coco’s physique that would set her apart from any number of other similarly-built teens— when dealing with symbolic goods like “beauty” and “fashionability,” we would be hard pressed to identify objective measures of worth inherent in the good itself. Rather, social processes are at work in the fashion modeling market to bequeath cultural value onto Coco. The social world of fashion markets reveals how market actors think collectively to make decisions in the face of uncertainty. And this social side of markets, it turns out, is key to understanding how investors could trade securities backed with “toxic” subprime mortgage assets leading us into the 2009 financial crisis.
http://www.3quarksdaily.com/3quarksdaily/2010/07/how-supermodels-are-like-tox...
A fascinating look at how imitation and groupthink, the desire to be fashionable by being like all the other fashionable people who are like all the other fashionable people, helps explain investors buying toxic assets when they knew better. Because they base what they do on what other people do and might think they end up magnifying a few bad choices made by the “right” people. This also has profound effects on individual choices when people want to be accepted by a group. Do we base our actions and words based in what other people perceive as beautiful? Do we act like Christians or like what other people think of as Christian? Do we base our walk on our convictions, or what other people would think looks spiritual?
