The Economics of Fear – Beware of the Jackal in You

Is fear rational? New joint research conducted by the Cornell Food and Brand Lab and the Laboratory for Experimental Economics and Decision Research shows a lack of correlation between fear and logic. Economists have traditionally viewed the risk-response as proportional to the peril at hand, while psychologists have contended that people have little control over their reaction to risk. This is because our feelings regarding risk are often not proportional, and instead fear-based. Is it more likely that you’ll be hurt in a plane crash, or on the car ride to the airport? Certainly the airport, but knowing that does not always relate to a reduced fear of flying. Cyanide in Tylenol bottles killed seven people in 1982, and the terrorist attacks of 9/11/2001 killed nearly 3000. Why, in a world where every year 30,000 people die in automobile accidents every year, do we so heavily invest in less-sensical preventative measures to promote public safety? What’s the lesson here? Fear is not always rational, and often is a response to stigma and disproportionate to the situation. So what? When you’re afraid, think it through! Think about the real risk associated with your actions. You might find yourself too quick to say no to experiences that are worth having! (Excerpt from Toxics, Toyotas and Terrorism)(http://foodpsychology.cornell.edu/outreach/toyota.html)

Having spent three weeks in Iraq travelling through Kurdistan, Baghdad, Basra, Karbala and Najaf I saw a repetitive trend of businesses being controlled by a specific group or individuals. There is no denying the uncertainties and the current breakdown of the security apparatus but the probabilities of an imminent threat are no more than that in any other country currently in the EMEA; I am a practical proof of this fact as I am writing this article being safely back in Dubai without experiencing any unpleasant event.

The general perception goes something like this; people follow mainstream media that is based on 90% sensationalism, 5% creativity and 5% truth and form a perception of the situation. So our minds are controlled by an urge for gory images and “Bad News” not realizing that it is being actualized in our minds as a reality. Walking down the markets in Baghdad was the same as in New York, Frankfurt, Paris, Lagos, Cairo etc. People were out on the streets shopping, strolling, working and just going about their business. In the meantime the markets were being administered by certain individuals who have taken advantage of the fear factor and are milking the economy.

I can talk about my expertise in Mobile Devices where a handful of individuals dictate the channels, prices, inventory even in the remotest parts in Southern Iraq. They are not thugs or would intimidate you by any way rather they are just taking advantage of the “Atmosphere of Fear” where they know that their competitors in the Middle East would not dare enter these territories. The economics of fear is not just about personal safety but also for the retrieval of ones capital. The “Big Guys” here have nurtured age old relationships and provide hefty credit to all their customers plus a warranty for defective devices.

I experienced the same phenomenon during my travel in Iran for the past two years. I was repeatedly asked if the country has a basic infrastructure, would the money be secured in the country, would it be impossible to travel in the west if we have an Iranian Immigration stamp on our passport, can people communicate in English language and a lot of other absurdities. I was once challenged by an individual who had never set a foot in Iran when I informed him that Coca Cola has a local production facility in the country. I was condemned by the same person for informing him that although Apple does not officially sell in Iran but there are 60,000 monthly activation’s of Iphones on Iranian Networks. The same economics of fear prevailed in the country and a few individuals reaped the benefits. Now as the West has decided to open the doors to this Magnificent Nation, the same group is ready with a platform to further enrich themselves.

The gist of my essay is to inform the reader first hand that just as any thing in life its important to explore the unknown if we have to grow beyond the mundane and the monotonous. Regular markets have become too overcrowded and beyond competitive, it is extremely important to explore the territories beyond the news headlines.

As Robert Frost said in his famous poem “The Road Not Taken”

Two roads diverged in a yellow wood,

And sorry I could not travel both

And be one traveler, long I stood

And looked down one as far as I could

To where it bent in the undergrowth;

 

Then took the other, as just as fair,

And having perhaps the better claim,

Because it was grassy and wanted wear;

Though as for that the passing there

Had worn them really about the same,

 

And both that morning equally lay

In leaves no step had trodden black.

Oh, I kept the first for another day!

Yet knowing how way leads on to way,

I doubted if I should ever come back.

 

I shall be telling this with a sigh

Somewhere ages and ages hence:

Two roads diverged in a wood, and I–

I took the one less traveled by,

And that has made all the difference.

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