What is it about?

The 2007-9 Great Recession was associated with multiple bubbles in housing markets, stock markets, and bond markets. Indeed, bubbles are becoming frequent and dangerous. Conventional economics is loathe to admit that bubbles exist. But people, using commonsense lay intelligence, can sense bubble phenomena happening around them. In this paper, we present a simple typology of bubbles, and the processes that lead up to bubbles.

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Why is it important?

More frequent, more intense and more dangerous bubbles threaten people's savings, work lives, and retirement years. Bubbles are too important and dangerous to be left only to 'experts' in economics. Multidisciplinary approaches that blend economics, sociology, political science, cultural theory and more are needed. This paper makes a start, and we followed it up with the book "Toward a Metatheory of Bubbles". We are continuing to work with such multidisciplinary approaches to probe bubbles.

Perspectives

After this article and a subsequent book-length treatment of the topic, Romeo Turcan and I have come to realize that the phenomena of runaway sentiments shaping major collective behaviors (often with massively adverse outcomes) are very prevalent -- through history and now. We are therefore continuing to explore various facets of such phenomena. "Runaway sentiments" occur in contexts other than bubbles also, and hence need broader research attention.

Dr Nikhilesh Dholakia
University of Rhode Island

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This page is a summary of: Bubbles: towards a typology, foresight, April 2013, Emerald, DOI: 10.1108/14636681311321095.
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