On Twitter, I came across a cartoon image of an anthropomorphized bowl of noodles with a doctor standing by his bed. A crowd of other Chinese dishes is looking through a window with a concerned look on their faces. They are all wearing surgical masks. The bowl of noodles is Wuhan’s regional specialty: “Hot Dry Noodles.” It made me curious to try it. I asked my Instagram friends where I might find it, and @arron.aron.erin suggested that I look into Taste of Northern China. Sure enough, on their menu, I found “Wu Han Hot Dry Noodle.” My wife and I decided to go there for dinner, and found ourselves being the only customers.
I’ve been closely following the development of the coronavirus that started in Wuhan, China, not because I’m worried about catching it, but because it’s an interesting case study of mass psychology.
In my view, fear comes in two forms, imminent and derivative, which are loosely analogous to stocks and derivatives (like futures and options). When we see a snake, our fear is imminent and intuitive. We are also capable of scaring ourselves by merely thinking about something scary, which is the derivative form of fear. The risks associated with owning shares of an individual company are intuitive, but the risks associated with the options on the same stock are not.
In Hong Kong, I heard that someone spread a rumor that they are running out of toilet paper, which led to panic buying. In a short period, they were all sold out. If I were in Hong Kong, and even if I knew that it was just a stupid rumor, I would still have to run out to get some. Whether the fear has a basis in fact is irrelevant at that point. That is how derivatives are generally traded in financial markets too; their underlying assets become irrelevant.
With the Wuhan virus, it has become difficult to isolate the fear of the virus from the fear of the fear. If you are relatively healthy, the probability of dying from this virus is very low; this is not like HIV. What is scarier is how you could become ostracised by everyone around you.
These imagined fears are much more destructive than real fears; they keep us up at night.
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