Why entire societies can suffer panic attacks

When historians write about panics, they tend to focus on societal panics, extraordinary moments arising amid epidemics, financial collapses, or war: Pearl Harbor, the 1929 stock market crash, 9/11. There is scale, audaciousness, an element of surprise, and feelings of discontinuity to the event. There is a clear sense of “before” and “after” to a moment in which our lives feel upended. Societal panics are a shared traumatic event in which large numbers of people have their feelings of certainty and control upended at once.

Today, we experience societal panics in ways that are different from in the past. During the 2008 banking crisis, I spent a lot of time researching prior financial crashes and looking for behavioral parallels, figuring they might come in handy. In my work, I stumbled across the Panic of 1857, a pre-Civil War financial crisis that followed a major boom in the U.S. economy that included the California Gold Rush.

When historians write about the Panic of 1857, one of the first things they routinely mention is that while it was not the first financial crisis in American history, it was the first in which panic spread rapidly throughout the country. Amid the Panic of 1837, the financial crisis that had occurred just 20 years earlier, news could travel only as fast as the postal service. Back then, news took weeks, sometimes months, to spread. In 1857, 14 years after the invention of the telegraph, news spread much more rapidly, creating a confidence crisis for investors throughout the United States and Europe in just a matter of days.

Since then, as communication technology has evolved — from telegraph to telephone to radio to television to the internet, cell phones, social media, and a 24-hour news cycle — the speed at which news travels and the population it reaches has exploded. Just as changes in material fabrication and computer simulation and modeling capabilities have enabled amusement park roller coasters with steeper and faster drops than ever, advances in communication technology have had a similar impact on the acceleration and scale of collapses in societal confidence.

Given this pattern’s broader backdrop to confidence, it is worth highlighting, too, that the United States has now experienced three major societal panics since the turn of the millennium: the attacks of September 11, 2001, the banking crisis of 2008, and the COVID-19 pandemic starting in 2020. The 9/11 attacks sparked an extraordinary collapse in confidence that resonated across all sectors of society. The banking crisis moved more slowly, but when the subprime mortgage losses that policymakers had initially characterized, too, as “contained” spread to higher and higher quality loans and borrowers, panic raced through the financial system. As the stock market swooned and home foreclosures soared, feelings of powerlessness and uncertainty quickly spread across America.

While it may be an overstatement to suggest that we are now “primed” for societal panic, this repetition matters. We no longer see a large-scale crisis as an exception or something from distant history. While a societal panic is still abstract, there is far less psychological distance today between us and the threat of one than there once was. Moreover, and as anyone who has experienced a panic attack knows, fear of another panic can be self-reinforcing. We need to appreciate that if a societal panic is triggered, the pace at which confidence may collapse could be blistering given today’s technology tools paired with our extreme social interconnectedness.

The COVID-19 pandemic, 2008 financial crisis, and 9/11 attacks were all large-scale societal panics rooted in sudden collapses in confidence. All three events brought with them immediate and collective existential dread. Smaller-scale panics, though, happen routinely in the business world, albeit often at the same blistering speed, thanks to social media. The Deepwater Horizon oil rig explosion in April 2010, the back-to-back Boeing 737 MAX jet crashes in the fall of 2018 and the spring of 2019, and the Colonial Pipeline ransomware attack in May 2021, which cut off gasoline supplies to parts of the east coast of the United States, are just three examples that readily come to mind. In all cases, the confidence of management, employees, customers, and shareholders was simultaneously upended. Leaders had but moments to respond before their crises were global news headlines, with millions demanding answers to the same question: “How could this happen?!”

Business panics don’t always involve catastrophe and flaming headlines. Often overlooked are the panics that happen among rank-and-file employees in the wake of industry-consolidating mergers. As companies come together with promises to shareholders of major cost cutting, low-level-employee morale frequently collapses. Vulnerability skyrockets as workers feel powerless while they wait to hear news of their fate.

The introduction of new technology, particularly among older employees, can foster similar feelings of vulnerability. In the 1990s, the rise of computer-aided design and drafting (CADD) systems felt like an existential threat to long-tenured draftsmen as engineers took on the role of drafters and designers.

While far smaller in scale than our societal panics, business crises generate similar feelings for those involved — and they also generate similar kinds of responses.

Lastly, there are the panics we all experience in our own lives — the sudden increase in vulnerability as a major deadline nears for a project, or as we await news of an important medical test result, or when we’ve unexpectedly suffered a major injury. Moments like these demonstrate that no matter the cause, panic is what we experience as feelings of intense powerlessness and uncertainty suddenly take hold.