See M. A. Bernstein, The Great Depression (1989); C. P. Kindleberger, Manias, Panics, and Crashes (1989); C. R. Morris, Money, Greed, and Risk (1999).
In economics, a severe financial disturbance, such as widespread bank failures, feverish stock speculation followed by a market crash, or a climate of fear caused by economic crisis or anticipation of such a crisis. The term is applied only to the initial, violent stage of financial upheaval rather than the whole decline in the business cycle (see depression and recession). Until the 19th century, economic fluctuations were largely connected with shortages of goods, market expansion, and speculation (as in the South Sea Bubble). Panics in the industrialized societies of the 19th–20th centuries have reflected the increasing complexity of advanced economies. The Panic of 1857 in the U.S. had its seeds in the railroads' defaulting on their bonds and in the decline in the value of railroad securities; its effects were complex, including not only the closing of many banks but also severe unemployment in the U.S. and a money-market panic in Europe. The Panic of 1873, which began with financial crises in Vienna and New York, marked the start of a long-term contraction in the world economy. The most infamous panic began with the U.S. stock-market crash of 1929 (see Great Depression).
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Prehistoric men used mass panic as a technique when hunting animals, especially ruminants. Herds reacting to unusually strong sounds or unfamiliar visual effects were directed towards cliffs, where they eventually jumped to their deaths when cornered.
Humans are also vulnerable to panic and it is often considered infectious, in the sense one person's panic may easily spread to other people nearby and soon the entire group acts irrationally, but people also have the ability to prevent and/or control their own and other's panic by disciplined thinking or training (such as disaster drills). Architects and city planners try to accommodate the symptoms of panic, such as herd behavior, during design and planning, often using simulations to determine the best way to lead people to a safe exit and prevent congestion (stampedes). The most effective methods are often nonintuitive. A tall column, approximately 1 ft (300 mm) in diameter, placed in front of the door exit at a precisely calculated distance, may speed up the evacuation of a large room by up to 30%, as the obstacle divides the congestion well ahead of the choke point.
In sociology, precipitate and irrational actions of a group are often referred to as panics, as for example "sex panic", "stock market panic". (See hysteria.) Panic is usually understood to mean active, but senseless behavior (e.g. trying to flee in a random direction or suddenly attacking others without consideration), while hysteria often carries a more passive notion (as in crying uncontrollably). An influential theoretical treatment of panic by a sociologist is found in Neil J. Smelser's, Theory of Collective Behavior.
The science of panic management has found important practical applications in the armed forces and emergency services of the world.
Many highly publicized cases of deadly panic occurred during massive public events.
Football stadiums have seen deadly crowd rushes and stampedes, such as at Hillsborough stadium in Sheffield, England, in 1989. This led to controlled entry gates and stricter rules by the end of the 1980s to regulate seating arrangements.
Some criminal defendants attempt to evade or reduce the severity of their conviction by claiming their violence was induced by a sense of panic. Certain jurisdiction may limit punishment in case one's actions for self-defense were excessively powerful because of panic reaction.
Panic experienced by air travellers during the last minutes of their lives aboard crashing commercial flights has been the basis of several multi-million dollar lawsuits brought against airlines, based on the legal concept of emotional suffering.