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Posted : 2010-04-22 18:30
Updated : 2010-04-22 18:30

Koreans Swayed by Herd Mentality

By Kim Tae-gyu
Staff Reporter

After news reports hit the nation last week that a species of mosquito transmitting viral diseases causing brain inflammation had been found, Koreans started snapping up any products associated with bugs.

The mosquitoes were only found on Jeju Island, the country's southernmost province, but the buying spree spread across the country.

Domestic online retailers say that sales of mosquito nets and insect repellents jumped by about 50 percent over the past week from a year ago.

In the nationwide anti-bug fever, experts see the so-called "bandwagon effect," or the manner under which people behave or take any belief just because many others do so.

"It is legitimate for people to prepare for the advent of dangerous mosquitoes. But I think it is too much for non-Jeju residents to gobble up mosquito nets right away," a Seoul analyst said.

"Koreans are susceptible to herd mentality. When their neighbors do or believe something, many of them just follow suit. I regard Internet witch-hunting, real estate speculation or regional dominance of a certain party to stem from such a perspective."

Even the country's top financial regulator warned midway through last year that herd behavior can end up generating asset price bubbles, thus wreaking havoc on the economy.

"I admit that rich liquidity has been funneled into the market in an effort to deal with the financial crisis, but it has not caused inflation or an asset price upsurge at the moment," Financial Supervisory Service Governor Kim Jong-chang told a forum.

"Should the economic recovery start in earnest, however, I worry about the various side effects of the massive liquidity caused by such herd behavior."

What Kim took issue with is the possibility this behavior may create an asset price bubble based on the low costs of borrowing ― the benchmark interest rate set by the Bank of Korea stands at a historic low of 2 percent.

"In particular, we are keeping a watchful eye on the increasing amount of house mortgages in areas such as southern Seoul designated as speculation zones," Kim said.

Another downside is that the mindset may call for mere conformity while intruding upon innovative thinking as amply demonstrated by partisan regionalism. In other words, herd mentality may choke innovation.

The nation's partisan regionalism, basically the long-lasting conflicts between Gyeongsang and Jeolla provinces, has been improving over the past few decades.

However, such antagonism has still sprouted up during national elections. Under the country's regionalism, it does not matter whether or not a candidate's policies are innovative and constructive ― the only factor that counts is which party supports the candidate.

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