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IAREP/SABE 2008 at LUISS in Rome Psychology of the Stock Market in the Interface between Investors and Media. Annamaria Silvana de Rosa, Cristina Gioiosa.
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IAREP/SABE 2008 at LUISS in RomePsychology of the Stock Market in the Interface between Investors and Media. Annamaria Silvana de Rosa, Cristina Gioiosa. Authors contacts: University of Rome "La Sapienza", Faculty of Psychology 2, European Ph. D. on S. R. and C., P.za d’Ara Coeli, 1, 00185 Rome, Italy. annamaria.derosa@uniroma1.it
Theoretical Introduction: Money as Social Representation and new Symbolic scenario of “risk”.
As early as in 1937, Keynes downplayed the impact of rationality in the economic field, reducing it to mere “adequacy” to a given cognitive situation, although he did not deny the need for choices to be rational (Ferrari & Romano, 1999). Along the same lines, Simon (1985) introduced the notion of bounded rationality in the field of economic psychology, which leads individuals to be pleased with satisfactory solutions (Kirchler & Zappalà, 1995). Rationality and economy
Risk Many are the studies on the socio-cultural dimensions (Tulloch & Lupton, 2003) of Risk: • The symbolic-cultural approach proposed by Mary Douglas (1992) and her colleagues; • The sociological approach of the “Risk Society”, the most authoritative of whose are Ulrich Beck (2002) and Anthony Giddens (1990); • The theoretical approach of the so called “Governamentality”, which was inspired by the works of the French philosopher Micheal Foucault (1978).
Risk implies a need of control towards the uncertainty… • using rational reasoning, institutional systems of prevention or other “scientific” methods, to single out possible risks before they could turn real (Luhmann, 1991; Lupton, 1999; Sofsky, 2005). • experiencing “heroic life” (Featherstone, 1995): reaching the apex of being excellent, going beyond man’s everyday limits.
Media and Financial Markets • Media contributes to create and to diffuse the Social Representations (de Rosa, 2001). “The surprising results achieved by the Market from time to time, are caused by the fact that event reports in the media have an effect on our motivations that we would have never expected” (Shiller, 2000. p. 205).
The multidimensional model of the stock market SR structure: Risk
Print media analysis 6-05-2003 “Il Messaggero”
The Hypotheses were: • The Social Representation of the Stock Market is influenced by the Social Representation of the Risk; • The Risky Stock Market Social Representation is influenced by critical events, their emotional impact and fluctuations of Stock Market indexes.
Methodology – the sample We analyzed the press discourse which was conveyed in two best-selling Italian newspapers (“La Repubblica” and “Il Sole 24 Ore”), published between January 2000 and December 2003. While “La Repubblica” is a mainstream newspaper mostly dealing with economic issues related to political news and current affairs, “Il Sole 24 Ore” is a “specialized” newspaper which is totally dedicated to economic and financial news. From each newspaper’s population, we randomly selected a 100-article sample, for a total of 200 articles, which we then analyzed using Alceste.
The Illustrative variables We considered the following as illustrative variables: • Main events reported in every article; • Main emotions reported in the article; • Fluctuations in the Mib30 security index during 15 days around the date when the article was published; • The different kind of newspaper.
Text coverage and stability index: The occurrences (meaning “every word appearing in a text”, Bolasco, 1997, p. 168) we analyzed in our study were 55.7% of total occurencies, showing a text coverage percentage greater than the required 30% minimum (Matteucci and Tomasetto, 2002). To verify class stability, Alceste performed the Descending Hierarchical Classification twice (Image, 1998, 2002). Both classifications were compared by calculating a stability index which turned out to be very satisfactory, with a 81.95%, which is much greater than the required 50% (Matteucci and Tomasetto, 2002).
Class: 2-5 Orizontal axis Class: 1-4 Vertical axis
Stock Market, Risk and Internet • These results confirm those found out from the print media analysis on the Social Representation of Risk in Stock Market: risk as "Danger" or as "Opportunity". • It also comes out that the more aggressive investors represent Internet as a specific instrument for searching and collecting the information to better invest on the Stock Market, and the Risk as an event of "playful" destiny, offering the opportunity to make a profitable investment.
Time perception, social interaction, media... • The orientation toward the past constitutes a mediator of less risky attitudes of investment. • High levels of knowledge are connected with low orientation to the past, a high educational level and typology of working activity. This result confirms an action of mediation of the knowledge on those variables affecting the risk attitudes of the investor. • The perceived media influence seems to play a less defined role, even if nearly half of the investors collects financial information via print media and all the investors consults various instruments of mass information. • Through the analysis of the Optimal Scaling procedure it has been hovewer possible to underline a relation between such dimensions and three areas. The Auto-directed tendency is associated to a low orientation towards the past, while the Hetero-directed to a high level of orientation towards the past, low control and planning and low instant orientation.
Supplementary variables; ∆ Area of the Identity profile ; Area of the Behaviour; ◊ Area of the socialization and communication agencies.
Sub-populations: • The analysis of the Optimal Scaling has identified three completely distinguished areas corresponding to a triple typology of investors: • Two on the left of the axis of the formers that identify Hetero-directed and Hetero-Autodirected investors. The Hetero-directed have low scores of Risk Propensity and invest through Promoters, Intermediaries and Advisers. The Hetero-Autodirected have medium scores of Risk Propensity and uses the traditional places of the economic transactions: Bank and Post office. • One on the right of such axis that identifies the Autodirected investors with high level of Risk Propensity investing high percentage of capital per family estate, via the Internet.
Findings The two studies are placed in a research area of the economic psychology related to the Stock Market psychology, worthy of developments and deepenings, considering the importance of the investments that, in the scenario of our globalized economy, involve all the markets, and not only the experts, but also everyday people. The results of the two studies (the print media analysis and the multimethodological interview to the investors) underlined that the social representation of Investment on Stock Market and Risk are interlinked and bipolarised in two modalities such as opportunity and danger. The Associative Network of Investment on Stock Market stressed the investor’s representation of risk as a control ability.
