Foreclosure and debt: Contagious?

Flickr photo by Dan Queiroz.

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In my leisure-time reading lately, I've noticed that several concepts just seem to keep coming up over and over again. And they're not just garden-variety topics, either. Social contagion theory, for example, is a growing area of study in social science that I read about in Psychology Today ("Is Depression Contagious?"), on Deepak Chopra's blog, and in a couple of other places, all over the course of a couple of weeks.

The most in-depth article I read on the topic was a 10-screen New York Times article detailing the results of a new re-analysis of some of the data from the six-decade-long Framingham Heart Study, which resulted in the eureka-style epiphany that "good behaviors -- like quitting smoking or staying slender or being happy -- pass from friend to friend almost as if they were contagious viruses."

Similarly, bad health behaviors were found to run in groups, too. If you smoke, the people around you are more likely to smoke. If you become obese or drink too much, the people around you were found by the study's authors to be about 50 percent more likely to do the same.

This "social contagion" was found to survive up to two degrees of separation: people who shared a common friend with the obese person (but didn't actually know the obese individual themselves) were found to be 20 percent more likely to be obese, and, as Chopra so concisely summed it up, "a friend of a friend is 10 percent more likely." (Skeptics take note: There is also a field of social psychology that feels the causation runs in the opposite direction. Convergence theorists believe that, like my Mom said, "Birds of a feather flock together" -- not that the birds' feathers conform to each other because they are flocking together. But I digress.)

The New York Times article was titled, "Are Your Friends Making You Fat?"

Of course, when I read that, in my hypertext real estate and finance-fixated brain, the first window that popped open was, "Are Your Friends Making You Broke?" That is, does social contagion theory apply to personal finance behavior, too?

There's no reason why it shouldn't. The same invisible, but very real, social influences that cause a YouTube video of a deer coming in through the dog door to go viral and that allow Twitter to go from zero to infinity-million users in 10 minutes are certainly powerful enough to render the vernacular of foreclosure fears; the depressive emotionality felt by many upside-down homeowners; and even the perceived urgent need for loan modification infectious from person to person.

Perhaps, with this social contagion theory, we've struck upon a new explanation for the human inclination to try to keep up with the Joneses. Maybe this is why every one of my buyer clients, during a house hunt or just after closing, blossoms into a little referral center, as the client all of a sudden seems to have a number of friends and relatives who also need to buy. ...CONTINUED

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