Robert Shiller had a very interesting article in the New York Times on November 1st about the global financial crisis. Shiller notes that a number of people did foresee oncoming troubles in the housing market and the financial system several years ago. However, he argues that the Federal Reserve downplayed the warnings being sounded by various people. Here is an excerpt from Shiller's article:
"But why weren’t the experts at the Fed saying such things? And why didn’t a consensus of economists at universities and other institutions warn that a crisis was on the way?
The field of social psychology provides a possible answer. In his classic 1972 book, “Groupthink,” Irving L. Janis, the Yale psychologist, explained how panels of experts could make colossal mistakes. People on these panels, he said, are forever worrying about their personal relevance and effectiveness, and feel that if they deviate too far from the consensus, they will not be given a serious role. They self-censor personal doubts about the emerging group consensus if they cannot express these doubts in a formal way that conforms with apparent assumptions held by the group."
I think Shiller has made a good point about social pressures for conformity that arise in groups and organizations, and that cause warning signs to be downplayed at times. However, I don't think the term groupthink technically applies here. Janis' work on groupthink tends to focus on pressures for conformity that arise within a team, such as the advisers to a President of the United States. In this case, Shiller is talking about a much more widespread pressure for conformity that extends beyond a team, and in fact, well beyond one organization.
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