the psychology of successful trading

Collective Narcissism


Some people claim that “collective Narcissism” explains some episodes where people behave in unexpected ways. For example, they elected Trump and they voted for Brexit. If Narcissism is interpreted in the formal way that psychiatrists do, this can’t really be true. On the other hand, as I will explain, there are ways of constructing the claim such that it reveals some valuable insights.

Theory of Mind

The way we predict and explain the behaviour of others is called “Theory of Mind.”  I explain that here: The short version is as follows.  

There are two major accounts of how we predict and explain the behaviour of others. One is Simulation Theory, where we predict others by simulating them. The other is Theory Theory, where we predict and explain others by using a theory of them. While the second account is the mainstream one, I have defended the simulationist account in my first book, “Simulation Theory:”

The major objection to Simulation Theory has been that it cannot explain systematic errors in Theory of Mind. This happens when people think about the infamous Milgram experiment. Participants are willing to give electric shocks to strangers, while everyone systematically fails to predict this. In addition, we have hundreds of experiments showing such errors predicting the behaviour of others.

Bias Mismatches

I dealt with this objection in my book by suggesting “bias mismatch” as the answer. If the person you are simulating exhibits a cognitive bias and you don’t, your simulation will fail. Cognitive biases are a fundamental feature of our psychology. Everyone has them. There are more than 180 of them.

For example, in the case of the Milgram Experiment, the bias you are not simulating is Conformity Bias. This is also called the Asch Effect. It is basically the idea that people tend to act the same as others. This effect is surprisingly strong.

Everyone exhibits Conformity Bias sometimes. But the observers do not exhibit it in the same way as the participants in the experiment.  In the experiment, the subjects are told very emphatically to proceed with the shocks. The experimenter is an authority figure in a lab coat. The experiment was conducted in the 1960s so people are more likely to do as they are told.  So the effects of Conformity Bias are very strong. The observers do not simulate Conformity Bias. As a result, they are surprised by how subjects behave.

Collective Narcissism: What is It?

Next we come to the Narcissism ideas, which I will situate in the above framework. The claim is that “collective Narcissism” about the greatness of a country causes people to make poor decisions. In the case of the US, they have elected someone who promised to make their country great again. In the UK, they have decided to take unwarranted risks with the trade position. Above all, they have done this without any benefits being available.

Certainly, the claim cannot really be that substantial numbers of people are actually suffering from Narcissistic Personality Disorder. This is because NPD subjects make up around 1% of the general population. This is quite common. Many psychiatric disorders have around a 1% prevalence rate. I think that this is because if it is much less, we cannot see it. And if it is much more, we redefine it as normal!

So 1% of the population is not enough to elect a President or tilt a referendum. However, people can show Narcissistic tendencies. This could be a much larger element of the population. We don’t really have the data to say either way. But we need an explanation of why people voted for Trump and Collective Narcissism is a good candidate.

In order to look at the plausibility of that, let us consider what Narcissism looks like clinically. To help do that, I will now describe the criteria for a diagnosis of NPD.

Informally, Narcissism is excessive self-regard. Though it is perhaps unclear how one would characterise such excess. Subjects are often successful high-status individuals. Sometimes, the individual should have high self-regard.

Criteria for a Narcissism Diagnosis

Formally, four criteria must be satisfied in order for a subject to be diagnosed with Narcissistic Personality Disorder. These are: impairments in self-functioning, impairments in interpersonal functioning, impairments in intimacy and antagonism. Each of the requirements can be met in one of two ways.

Impairments in self functioning could mean excessive reference to others for self-definition and self-esteem. Or goal-setting may be based excessively on the aim of obtaining approval from others.

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Impairments in interpersonal functioning may result in either impaired empathy or by impaired intimacy. Empathy is the ability to recognise or identify with the feelings and needs of others.

Meanwhile, impaired intimacy means that relationships are largely superficial. They exist mostly to serve the ends of the subject.

Finally, a diagnosis also requires antagonism. That is characterised either as grandiosity, meaning feelings of entitlement or self-centredness, or attention-seeking behaviour.

Conclusions on Collective Narcissism

In conclusion, we can agree that many more people than 1% of the population could show tendencies like the above. I also think we can regard Narcissistic tendencies as a cognitive bias. That would be Narcissistic behaviour falling short of the criteria for a diagnosis. This would be much more widely prevalent in the population than the number of diagnosable subjects.

Therefore, if you simulate such people and you do not yourself have the same Narcissistic tendencies about the same issues, you will get it wrong. So we see how the claims that Narcissistic tendencies can explain our failure to predict the explanation of Trump and Brexit, despite abundant data pointing that way, can be because of our failure to account for something like Narcissism in others.

See Also: The US Was Defeated In #Vietnam By Systematic Theory Of Mind Error