March Book Pick

March 2021

By Tracy Turi, WEforum’s Editor


“Man, it has been said, thinks in herds. It will be seen that they go mad in herds while they only recover their senses more slowly and one by one.” Charles Mackay

It has been a year of epidemics, political and religious zealotry, and social and financial manias, much of it propagated through web-based platforms. According to William Bernstein, a financial theorist and retired neurologist, much of this is human nature, which is not a comforting thought to any parent trying to raise a child.

Bernstein describes his new book, The Delusions of Crowds: Why People Go Mad In Groups, as a ‘meditation on human nature,’ explaining that it is in man’s nature to listen to narratives, to imitate one another, and to seek out status. Why? Because it is these traits that carry survival value for entire societies. Conversely, these same traits can also become dysfunctional in the modern world in which modern technology can reach multitudes.

Bernstein writes that two substantial financial and religious delusions occurred in continental Europe in the 16th century following the invention of the printing press. He also notes that Hitler accomplished his delusions with the radio. By the beginning of the 21st century, we saw the Islamic State’s ability to almost instantly attract thousands of people from around the world, including some prosperous western nations, through the amplified effects of social media. Social media creates the proper environment for propagating manias at an accelerated pace, with each iteration and advance in communications technology.

Why does Bernstein draw parallels between social, financial, and religious zealotry? He argues it is because they are motivated by the same drives in human nature. He further notes, “the spreading of the mania, of the virus, of the contagion, is a social process.” Facts or data will not dissuade people because it is in their nature to listen to social, political, and cultural narratives rather than data, imitate what they see happening around them, and seek status. A compelling financial narrative can sweep people up as much as a compelling religious narrative. Whether the goal is to avoid eternal damnation or become effortlessly rich (overnight!), we gain status and the ability to pass along our DNA if we are the devout ones, the successful ones, the saved ones.

Bookstores everywhere should stock this book in the parenting section. Its insight is invaluable for parents who intuitively understand they can’t expect children to navigate these choppy waters unless their elders share the wisdom of the ages with them. According to Bernstein, it’s easy for entire groups to get caught up in herd-like thinking and manias, particularly when they are pelted continuously with an endless barrage of ping notifications. The “spreading of the mania, of the virus, of the contagion, is a social process,” particularly in today’s FOMO culture, whereas “disconfirmation is a solitary process,” which takes time and introspection.

Bernstein’s most recent book was inspired by Scottish journalist Charles Mackay’s Extraordinary Popular Delusions and the Madness of Crowds. Initially published in 1841, Bernstein claims “it saved his bacon” as well as that of the American financier and statesman, Bernard Baruch. Subsequently, both men anticipated their respective financial crises in time to preempt personal catastrophe. According to Bernstein, he also felt the need to update the Mackay book because scientists today know more about the neuropsychology behind the herd mentality. If we can help our children avoid the dysfunctional aspect of herd mentality, whether it is online or as they begin to make social, political, and financial decisions independently, maybe Bernstein’s book will help save their bacon too.


William J. Bernstein is a financial theorist and retired neurologist who co-founded the investment management firm, Efficient Frontier Advisors. He is also the author of “The Birth of Plenty: How the Prosperity of the Modern World Was Created,” “A Splendid Exchange: How Trade Shaped the World,” and “Masters of the Word: How Media Shaped History.”