"In economics, the majority is always wrong"
About this Quote
A jab at herd confidence, the line fits John Kenneth Galbraith, who made a career dismantling what he famously called the conventional wisdom. He saw economic consensus not as a neutral reading of reality but as a product of comfort, ideology, and vested interests. When many people depend on a belief for their status or profits, that belief becomes sticky, regardless of evidence. The majority becomes a social fact before it is a tested fact.
Markets and policy both showcase the pattern. Booms are fueled by widely shared narratives of novelty and safety, from 1929 speculation that Galbraith chronicled in The Great Crash to the dot-com and housing bubbles. The more unanimous the optimism, the thinner the margin of error; when everyone is on one side of a trade, prices embed that consensus and fragility rises. Policy fashions follow similar arcs. Deregulation was sold as efficiency until it magnified systemic risk. Austerity after 2008 was promoted as prudence until growth data and human costs exposed its flaws. The Great Moderation lulled experts into believing major recessions were tamed, right up to the global financial crisis.
The mechanism is as much sociological as analytical. Information cascades and reputational incentives push thinkers to cluster. It is safer, career-wise, to be wrong with the crowd than right too early and alone. Media amplifies simple stories; corporations and political actors fund congenial research; academic gatekeeping rewards incremental alignment over dissent. Under such conditions, majority views can be lagging indicators rather than guides.
"Always" is hyperbole. Some consensuses rest on hard-won evidence. Galbraiths point is not that contrarians are automatically correct, but that economic reality is complex, shaped by power, and prone to narrative capture. Skepticism toward the crowd is a discipline: test claims against data, watch incentives, and be most wary when agreement feels too easy. Majorities tend to be most wrong at extremes, precisely when their certainty is highest.
Markets and policy both showcase the pattern. Booms are fueled by widely shared narratives of novelty and safety, from 1929 speculation that Galbraith chronicled in The Great Crash to the dot-com and housing bubbles. The more unanimous the optimism, the thinner the margin of error; when everyone is on one side of a trade, prices embed that consensus and fragility rises. Policy fashions follow similar arcs. Deregulation was sold as efficiency until it magnified systemic risk. Austerity after 2008 was promoted as prudence until growth data and human costs exposed its flaws. The Great Moderation lulled experts into believing major recessions were tamed, right up to the global financial crisis.
The mechanism is as much sociological as analytical. Information cascades and reputational incentives push thinkers to cluster. It is safer, career-wise, to be wrong with the crowd than right too early and alone. Media amplifies simple stories; corporations and political actors fund congenial research; academic gatekeeping rewards incremental alignment over dissent. Under such conditions, majority views can be lagging indicators rather than guides.
"Always" is hyperbole. Some consensuses rest on hard-won evidence. Galbraiths point is not that contrarians are automatically correct, but that economic reality is complex, shaped by power, and prone to narrative capture. Skepticism toward the crowd is a discipline: test claims against data, watch incentives, and be most wary when agreement feels too easy. Majorities tend to be most wrong at extremes, precisely when their certainty is highest.
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| Topic | Decision-Making |
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