Social Media Rumors Could "Wreak Havoc" on Economy

by Erik Sass, Jan 8, 2013, 12:23 PM

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Rumors disseminated via social media could “wreak havoc” on the world economy, according to a new report from the World Economic Forum titled “Global Risks 2013.” The deliberate or accidental spreading of misinformation, poetically termed “digital wildfires” by the report, could result in mass stock sell-offs as well as (even) more serious consequences like disorganized, panicked mass evacuations -- basically stampedes on a giant scale that could cause thousands of deaths.

 

These cheerful thoughts are only a few of an array of threats to the world economy identified by WEF, including plenty of things unrelated to social media or technology per se: if you like you can also worry all night about a global pandemic, runaway climate change resulting in mass flooding, and even a visit by an advanced alien civilization (really). But social media provides the most interesting anxiety fodder, in my humble op-ed, in part because its capacity for sowing chaos has already been amply demonstrated.

 

Last August I wrote about a false Twitter rumor to the effect that Syrian dictator Bashar al-Assad had been killed or injured, which originated with a Twitter account supposedly belonging to Russian interior minister Vladimir Kolokoltsev and caused crude oil futures on the New York Mercantile Exchange to rise from $90.82 to $91.99. Also during August, tens of thousands of people from the northeastern Indian state of Assam fled after rumors of impending communal violence circulated on social media. Last and perhaps least, during Hurricane Sandy a jackass named Shashank Tripathi, using the Twitter handle @ComfortablySmug, triggered widespread alarm with false reports of severe damage in Manhattan.

 

On the positive side, the report notes that social media also holds out the means of correcting misinformation, as for example with erroneous Wikipedia entries. But the problem is that it would only take a relatively short amount of time for the damage to be done: “[I]t is conceivable that a false rumour spreading virally through social networks could have a devastating impact before being effectively corrected.” One of the report’s editors, Oliver Wyman Group CEO John Drzik, was quoted in a news report: “An analogy here is shouting ‘Fire’ in a crowded movie theatre. You might be able to correct that within a couple of minutes by saying ‘There isn’t a fire’, but in that couple of minutes, maybe a couple of people got trampled.”

 

There is probably only one real solution, according to the WEF report, which is really more of a preventative measure: “Ultimately, generators and consumers of social media will need to evolve an ethos of responsibility and healthy scepticism similar to that which evolved among radio broadcasters and listeners since the infamous War of the Worlds broadcast in 1938.”

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