A person kneeling before a false idol symbolizes the obsession with tulips during Tulipmania. In the 1630s, tulips became the most prized possession, with some of the rarest bulbs selling for as much as 3,000 to 4,200 guilders — enough to purchase a luxurious home in Amsterdam’s most fashionable district. In today’s value, these prices would equate to $500,000 to $1,000,000 USD, illustrating the extreme speculation of the period. The illustration was created by the author using Adobe AI.

The Psychology Behind Economic Bubbles:

Understanding Boom, Bust, and Human Behavior

Throughout human history, society, economics, and technology have followed cyclical patterns of growth and decline, prosperity and hardship, often driven by underlying psychological forces. These patterns are deeply connected to our primal instincts, which evolved during our hunter-gatherer past. By examining these historical trends and understanding the ingrained behaviors that guide them, we can glean valuable insights into how individuals and societies can recognize emerging patterns, adapt to changing conditions, and prevent potentially disastrous outcomes.

Creatively, human cognition and AI technology can harness the power of pattern recognition. The human mind possesses an extraordinary capability to recognize patterns, a skill attributed to the brain’s neural architecture and cognitive processes honed through evolution. This ability stems from the interconnected neurons forming complex networks, which enable the brain to process and interpret vast amounts of sensory information simultaneously. The cognitive mechanisms involved include schemas — mental structures that organize and interpret information — allowing for quick pattern recognition based on prior knowledge and experiences. Furthermore, learning and memory play a crucial role; the more exposure the brain has to specific patterns, the more efficiently it can recognize them. This process is evident in skills such as language acquisition, where repeated exposure aids in predicting and understanding language patterns. Pattern recognition has evolved as an adaptive trait, enhancing survival by enabling early humans to detect threats, locate resources, and navigate their environments. The human capability to recognize patterns has also inspired artificial intelligence technologies, which utilize neural networks and machine learning algorithms to emulate this human skill, learning to identify and predict patterns in data. The illustration was created by the author using Adobe AI.

Recognizing Patterns Before They Emerge: Lessons from Hunter-Gatherers

In ancient times, the ability to recognize and respond to emerging patterns was vital for survival. A young tribesman venturing to retrieve honey from a beehive, risking stings while others used smoke to subdue the bees, is an excellent example of pattern recognition and risk assessment. This seemingly simple action required careful observation of the bees’ behavior, collaboration, and strategy — skills essential for survival. Once the honey was retrieved, the tribe would consume all of it in one sitting. This binge behavior was driven by necessity: they lived in a feast-or-famine world, where the next opportunity to find honey might be months away. Without the ability to store food, it made sense to feast while the resource was available.

Sugar addiction and ancestral behavior lie in the feast-famine cycle that shaped early human survival strategies. When facing food scarcity, Hunter-gatherer ancestors evolved to seek calorie-dense foods like sugar and fat whenever available. This built an inclination toward overconsumption during times of abundance, a behavior manifesting as modern sugar addiction. Studies highlight this connection, including research by Berbesque and Marlowe (2014) that shows how the feast-famine cycle drove high-calorie consumption for future shortages, a trait still in our genetics. Similarly, the dietary shift in colonized regions like Kiribati, where traditional nutrient-rich foods were replaced by processed, sugar-laden imports, illustrates the modern health issues stemming from our evolved predispositions. The “thrifty gene” hypothesis, examined by Chakravarthy and Booth (2004), suggests that genetic adaptations for energy storage have contributed to the current obesity epidemic, as these traits are no longer advantageous in our calorie-rich environment. While these ancestral behaviors were once beneficial, they now contribute to challenges like sugar addiction due to the mismatch between our evolutionary biology and the easy availability of sugary foods today. Photo Credit: Freepik AI.

Fast forward to the modern day, and the context has changed, but our ingrained behaviors remain largely the same. Instead of the rare and dangerous retrieval of honey, we can walk into a grocery store and find hundreds of jars of honey and endless varieties of sugary snacks. Despite this abundance, we continue to over-consume, much like our ancestors. The abundance of sugar in modern society has led to a health crisis, with widespread obesity and diabetes, problems directly tied to overconsumption. Our ancient instincts to binge on high-energy food — once necessary for survival — are now maladaptive in an environment where food is plentiful.

Gurdjieff’s assertion suggests that humans operate much like machines, exhibiting predictable patterns in behavior and response. This perspective highlights the idea that driven by conditioning and habits, our actions often follow set routines, diminishing our sense of free will and spontaneity. By recognizing these patterns, individuals can strive for greater self-awareness and personal transformation, seeking to break free from the mechanical aspects of their existence. The illustration was created by the author using Adobe AI.

The Evolutionary Mismatch: From Feast and Famine to Continuous Binging

This “evolutionary mismatch” highlights how our primal instincts, shaped in a world of scarcity, are ill-suited for the modern world of abundance. In the past, binging on honey or meat helped early humans survive periods of scarcity. Today, the same behavior leads to chronic overconsumption, contributing to modern health crises. Our instincts tell us to consume as much as possible as if this were the last meal we might have seen for weeks. But in reality, there is no shortage of food, and our inability to moderate consumption has created new challenges, including widespread diet-related diseases.

Economic Bubbles: Cycles of Boom and Bust. This illustration captures the cyclical pattern of economic bubbles, from Tulipmania to the cryptocurrency boom. Each bubble progresses through stages of displacement, boom, euphoria, profit-taking, and panic, reflecting the predictable interplay of human psychology — optimism, herd behavior, and fear. The illustration was created by the author using Adobe AI.

Economic Bubbles: Cycles of Boom and Bust

This same cyclical pattern of overconsumption can be seen in economic bubbles, which have occurred throughout history. From Tulipmania in the 17th century to the dot-com bubble and the recent cryptocurrency boom, economic bubbles follow predictable stages: displacement, boom, euphoria, profit-taking, and panic. These stages are not just financial phenomena but are rooted in human psychology — optimism, herd behavior, overconfidence, and denial fuel the rise of bubbles, while fear and panic drive their collapse.

• Displacement: A new technology or innovation creates excitement and disrupts traditional systems. In hunter-gatherer terms, this could be compared to discovering a new food source or tool that transforms how the tribe lives.
• Boom: Excitement grows as more people invest in the trend, similar to how early humans might rely heavily on a newly discovered resource, believing it to be an unlimited bounty.
• Euphoria: Speculation overtakes reason, and people become convinced that “this time is different.” This mirrors the overconfidence that can lead to poor planning or overuse of resources.
• Profit-Taking: Savvy investors recognize that the trend cannot continue indefinitely and begin to sell off assets, similar to how tribal leaders might anticipate resource depletion and plan accordingly.
• Panic: When reality sets in, and the bubble collapses, those who failed to recognize the patterns earlier are left scrambling, much like those caught unprepared when a resource suddenly becomes scarce.

The lessons from these bubbles show that while human societies and technologies have evolved, human psychology remains essentially the same. Just as early humans learned to adapt to environmental changes, modern societies must learn to recognize economic and social patterns before they lead to crises.

From Fireside Stories to Binge-Watching. This image captures young people engrossed in their screens, reflecting the digital age’s evolution of storytelling and entertainment. Photo Credit: Freepik AI.

Technology and Entertainment: From Fireside Stories to Binge-Watching

Another area where our ancient behaviors persist is entertainment consumption. In hunter-gatherer societies, storytelling around the fire was a source of entertainment and a vital means of passing down knowledge, sharing survival strategies, and reinforcing social bonds. These communal gatherings were often brief, lasting only an hour or two, but these stories were filled with valuable information for the tribe’s survival.

Social media fosters a cycle of constant scrolling and excitement over likes, yet this digital engagement can lead to feelings of alienation, loneliness, and depression. This image highlights the psychological effects of being hooked to our screens. Photo Credit: Freepik AI.

In today’s world, technology has transformed this simple act into a constant stream of entertainment. What was once a limited, communal activity has evolved into binge-watching entire seasons of shows, facilitated by endless content on streaming platforms. The exact psychological mechanisms that once made us crave stories for survival now drive us to consume entertainment in excess. We binge-watch content just as we binge on food as if it might disappear tomorrow. This leads to negative consequences for mental and physical health, just as excessive consumption of sugar leads to obesity and diabetes.

Feast or Famine Psychology: The tendency to consume everything in front of us, reflecting our instinctual response to abundance, often leading to gluttony, greed, and sloth. Photo Credit: Freepik AI.

Recognizing the Patterns: Changing Course in the Modern World

Understanding the evolutionary origins of these behaviors helps us recognize patterns before they fully emerge. Just as economic bubbles follow predictable cycles, so do our habits of overconsumption. Awareness is key to preventing the negative outcomes of these behaviors. Recognizing that our desire to binge on sugar or entertainment stems from ancient survival instincts can help us make more mindful choices.

For example, knowing that our sugar craving is rooted in an evolutionary need for high-energy food can lead to more conscious eating habits. Similarly, understanding that our binge-watching tendencies are a modern expression of an ancient need for storytelling can help us set healthier boundaries around screen time. By recognizing these patterns, we can take control of our instincts and make decisions that lead to healthier, more balanced lives.

Conclusion: From Feast and Famine to Modern Excess

The journey from ancient tribes consuming honey after a dangerous harvest to modern societies binging on sugar and entertainment illustrates a profound truth: while technology and culture have advanced, our core behaviors and instincts have remained the same. The challenge of modern life is learning to adapt these ancient instincts to a world of abundance, recognizing the patterns that drive overconsumption, and taking steps to change course before it leads to negative consequences.

Whether it’s our approach to food, entertainment, or economic bubbles, the lessons from history are clear: cycles of feast and famine, boom and bust, are deeply ingrained in human behavior. By understanding these cycles and recognizing the signs of excess, we can learn to moderate our consumption and avoid repeating the patterns that have caused societies to rise and fall throughout history.

During the peak of Tulipmania, some of the rarest tulip bulbs were sold for staggering sums, with prices reaching as high as 3,000 to 4,200 guilders (florins). To put this into perspective, at the time, 3,000 guilders could purchase a luxurious house on the most fashionable canal in Amsterdam. In today’s terms, based on historical currency value estimates, these amounts would be equivalent to approximately $500,000 to $1,000,000 USD, reflecting the extreme nature of the speculative bubble. Photo Credit: Wikipedia.

Tulipmania was a period of intense economic speculation and frenzy in the Dutch United Provinces during the 1630s when the price of tulip bulbs reached extraordinary levels. The phenomenon took place between 1634 and February 1637, driven by several contributing factors. At the time, the newly wealthy middle and upper classes sought to display their affluence through elaborate gardens, with tulips becoming a popular status symbol. The rarest and most exotic tulip varieties commanded particularly high prices due to the interplay of supply and demand. The difficulty of cultivating certain rare tulip varieties further increased their desirability. Additionally, a virus, later identified as the “tulip breaking virus,” caused unique and striking patterns on tulip petals, making these flowers even more coveted among buyers. Photo Credit: Wikipedia.

Read my article: Is The AI Bubble To Burst?

Is The AI Bubble About To Burst?

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