Expectations that events will develop in a certain way can make people act in such a way that expectations are realized even if they were initially wrong.

In Vietnam, the "ty vi" divination system is widespread, with the help of which people get predictions about whether their undertakings will be successful. Forecasts regarding the prospects of family life together are especially popular: couples, before getting married, turn to a soothsayer who, based on the time and date of birth of a man and a woman, concludes whether their marriage will be successful or not.

More than 80% of ethnic Vits know about "you vi" and where to turn for the right prediction; about a third (31%) thought about contacting a soothsayer when entering into their own marriage;

45% of respondents believe that the prospect of their marriage from the point of view of "you vi" worried their relatives and friends, a representative survey in 2020 showed.

It may seem that the idea of the success of an astrologically compatible couple is an unsubstantiated superstition.

But marriages, which are concluded on the recommendation of "you vi" predictors, really turn out to be more successful, economists Edo Chiskato (Leuven Catholic University), Quoc Anh Do (Monash University) and Kieu-Trang Nguyen (Northwestern University) found out.

Couples whose marriage, according to the prediction, should be successful have a higher standard of living than other representatives of their socio-economic class.

They earn 2.2% more, their household expenses are 2.7% higher, and their children are more likely to finish school. However, it is not the stars that contribute to the success of the marriage, but the self-fulfilling prophecy, the researchers concluded. If friends and relatives of the couple believe that their marriage is successful, as it is concluded taking into account "you", they are more likely to support her in difficult times.

Thus, successful - according to expectations, couples transfers from their social environment are 9% higher, and in case of hospitalization of one of the family members, such couples receive 24% more support from their loved ones.

As a result, in case of difficulties, prosperous couples are less likely to have to sell their assets or get into debt.

"Even if the spouses themselves do not really believe [in "you vi"], but believe that their relatives and friends firmly adhere to these beliefs, the couple has an incentive to live together successfully," says study co-author Kieu-Trang Nguyen. Successful couples from the point of view of "you-vi" really turn out to be more prosperous, and this belief is passed down from generation to generation, Nguyen adds.

A similar example of a self-fulfilled prophecy can be found in China, where it is believed that those born in the year of the Dragon will have good luck and greatness. Chinese children born in the year of the Dragon do learn better than children born in other years on the Chinese calendar and are more likely to receive a bachelor's degree or higher, according to a study conducted by Louisiana State University economists Naji Mojan and Han Yu. The main factor that affects the educational success of Dragon children is the positive expectations of their parents, which eventually become a self-fulfilling prophecy.

Mothers and fathers of Dragons initially expect their children to be more successful than children born in other years.

As a result, parents spend more time, money and effort to make their Dragons succeed, and even give them more pocket money and assign them less household chores so that they can focus more on their studies. "Althout neither the Dragon children nor their families differ in essence from other children and families, the belief in the prophecy of success and subsequent investments [in it] become self-fulfilling," the authors conclude.

Expectation realization mechanism

Most people have encountered self-fulfilling prophecies at least once in their lives. One example is "examination neurosis": an alarmed student, convinced that he is destined to fail, devotes more time to anxiety than to study, and really fails, described Robert Merton, professor of sociology at Columbia University.

Merton introduced the term "self-fulfilling prophecy" in 1948 to describe "a false definition of a situation that causes behavior that makes an initially false idea correct". Certain expectations regarding the future development of events encourage a person to act in such a way that these expectations eventually come true, even if they were not originally true. One of the main sources of inspiration for Merton was the law formulated in 1928.

William Thomas, one of the founders of American sociology and social psychology:

if a person considers a situation real, it becomes real by its consequences.

In his work, Thomas wrote about a criminal who was admitted to a psychiatric hospital for the murder of several people who had an unhappy habit of talking to themselves on the street:

"By the movement of their lips, he imagined that they were calling him nasty words, and behaved as if it were true." The criminal's false representations forced him to act in a certain way, which led to real tragic consequences.

"Thomas' theorem", as Merton called it, is, in his opinion, fundamental for social sciences and for understanding how society works.

People react not only to the objective features of the situation, but also and sometimes in the first place to the importance they attach to this situation.

And as soon as they attached some importance to the situation, their subsequent behavior and some consequences of this behavior are determined by this meaning, Merton wrote.

The mechanism of self-fulfilling prophecy can be divided into four stages, psychologists Arthur Stukas from the University of La Trobe (Australia) and Mark Snyder from the University of Minnesota pointed out.

At the first stage, a person accepts certain beliefs about those with whom he interacts. On the second it acts as if these beliefs were true. In the third those with whom a person interacts, adjust their behavior in accordance with his actions. On the fourth, a person interprets the behavior of others as a confirmation of his beliefs, and the cycle closes.

For example, if a person meets a stranger and considers him, even if mistakenly, an intellectual, he can choose quite complex topics for conversation with him and as a result of communication come to the conclusion that the interlocutor is really smart.

On the contrary, if a person considers the stranger he met to be "short-sighted", he may offer to discuss quite simple things and, as a result of the conversation, may conclude that the interlocutor is really limited.

Pygmalion and Rosenthal

The effect describing situations in which expectations, even erroneous ones, can make a person act in such a way that they are actually realized is often called the "Pygmalion effect". The effect got its name from the Greek myth of a sculptor who fell in love with the statue of a woman he sculpted, and the goddess of love Aphrodite revived her, seeing his strong feelings.

Just as Pygmalion's fixation on the statue allowed it to come to life, other people's expectations focused on a particular person can change his behavior and eventually lead to the realization of these expectations.

Lady and the flower girl

A kind of illustration of the mechanism of self-fulfilling prophecy can be the words of Eliza Doolittle from Bernard Shaw's play "Pygmalion", the title of which is an allusion to the ancient Greek myth of Pygmalion: "You see, the difference between a lady and a flower girl is... how people around them behave. With Professor Higgins, I will always remain a flower girl, because he behaved and will behave with me like a flower girl. But with you I can become a lady, because you behaved and will behave with me like a lady."

This phenomenon has another name - "the Rosenthal effect", in honor of Harvard University psychology professor Robert Rosenthal, one of the researchers who described the "Pygmalion effect" in 1968 in the book Pygmalion in the Classroom.

Rosenthal and Lenor Jacobson, director of one of the elementary schools in San Francisco, found that teachers' high expectations regarding the intellectual competence of their students could become a self-fulfilling prophecy.

They conducted an experiment: at the beginning of the school year, they tested schoolchildren for IQ level, and then told the teachers which of the students, according to the test results, should show a jump in intellectual development during the year. In fact, "successful in the future" students were chosen by the authors of the experiment at random.

However, re-measurement of IQ at the end of the school year showed that the performance of students who were expected to perform high did indeed improve more than the results of other students.

This happened because teachers who believed in the great potential of certain students paid more attention to them, were more patient with them and sought to inspire them more; in turn, these students' ideas about themselves and their motivation to learn improved in response to the favorable atmosphere created by teachers.

The "Rosenthal effect" can manifest itself not only in schooling, but also, for example, in management. Studies for example, on data from employees of large companies in China or research and development employees in one of the chemical companies in the United States show that higher management expectations for staff creativity do lead to increased employee creativity. Managers who have higher expectations for the creative potential of subordinates are perceived by employees as leaders who support creativity, and in response, employees are more likely to show creativity.

Expectation economy

Self-fulling prophecies can have an impact on the economy and financial markets. This mechanism can trigger a banking panic, as described in 1948. Merton, who coined the term "self-fulfilling prophecy". He illustrated his concept precisely by the example of the escape of depositors from the fictional Last National Bank, which resembled a real banking panic in the United States during the Great Depression.

As Merton described, rumors about the insolvency of the Last National Bank forced each of its depositors to feverishly try to save their money, and as a result, the bank's liquidity is depleted so much that it is unable to meet all the requirements of customers:

"The prophecy of collapse led to the self-realization of the prophecy".

If we talk about modern examples, we can recall the panic of depositors in March 2023, which became the main cause of the collapse of Silicon Valley Bank and increased the vulnerability of the entire U.S. banking system.

Forecasts of possible economic changes can affect people's perception of risk and, therefore, their economic decisions.

This can become the basis for the realization of a self-fulfilling prophecy, showed a study by psychologists Diamantis Petalas, Hein van Shee and Paul Vettechen from the University of Nijmegen (Netherlands). They conducted a laboratory experiment, during which they offered the participants to inflate balloons, receiving a symbolic reward for each pumping.

During the training, the balloon could be inflated a maximum of 12 times, after which it burst and the reward was zeroed. During the experiment, the participants were informed of positive or negative forecasts, which said that the probability of bursting balls could decrease (or increase), affecting the win.

The message only signaled the possibility of future changes, but not that they would necessarily happen.

However, it turned out that after the negative message, the participants inflated the balloon less actively (they risked less future winnings), and after the positive message inflated the balloon more actively (they risked more).

Thus, the projected changes can reduce or stimulate a person's risk-taking and make him act as if these changes had already occurred, distorting the decision-making process, the authors came to the conclusion.

A clear example of self-fulfilling prophecies in the economy can be inflationary expectations.

Central bankers and economists consider inflation partly as a self-fulfilling prophecy, wrote Carlo Pizzinelli, an economist at the IMF.

If consumers believe that prices will rise rapidly, they can make hype shopping until the necessary goods rise in price and ask for a salary increase. Employee demands to increase wages, in turn, will encourage firms to raise the prices of their goods or services to compensate for higher labor costs.

As a result, a spiral of salaries and prices may arise. To prevent such a self-fulfilling prophecy of inflation, central banks have two ways. The first is the use of traditional monetary policy tools, such as raising the key rate.

However, when inflation got out of control, and inflation expectations formed a spiral of wages and prices, the stabilization of the situation may require extremely tough measures and a large increase in rates, which is fraught with a recession for the economy (an example is the taming of inflation in the United States in the 1980s).

The second way is communication with consumers and markets: by the strength of its impact, communications can even replace traditional tools but when society trusts a monetary regulator.

That is why trust for the central bank is a key element of the success of its monetary policy. In the debt crises of countries, one can also find signs of self-fulfilling prophecies:

when investors fear default, they act in such a way that default becomes more likely, and as a result, the country may be insolvent because investors are afraid of default, described the mechanism by Paul De Grauwe of the LSE and Yuemei Ji from the University of Leuven.

https://www.sciencedirect.com/science/article/pii/S0261560612001829

When investors fear any difficulties in paying the national debt, they sell government bonds, which raises the bond rate and leads to an outflow of liquidity.

As a result, there may be a situation in which the government will not be able to prolong its debt obligations, except at exorbitant interest rates. And the liquidity crisis can easily develop into a solvency crisis.

The authors found that a significant part of the sharp growth in spreads in the peripheral countries of the eurozone in 2010-2011 was not related to the growth of the debt-to-GDP ratio of these countries and was the result of negative market sentiments that had intensified since the end of 2010 - in other words, the debt crisis in the eurozone was largely self-fulfilling.