Reader question:

Please explain this sentence: “We often seek safety in numbers.”

My comments:

We feel safe when we’re in a crowd. Therefore, knowingly or unknowingly, we seek safety in numbers, large numbers, that is. The greater the number of people there is in a crowd, the safer we feel in that crowd.

This is what “safety in numbers” means.

This expression is based on observations in nature, where, in many instances, animals tend to flock together, especially in times of danger.

Sheep, for example, are very timid creatures. They always huddle together.

Small fishes in the sea are often seen swimming in a thick pack, especially in face of attack, say, by sharks.

Humans, too, behave likewise. Workers join a union, for example, because belonging to a group makes them feel better. The workers’ union tends to get better deals from an employer precisely on the strength in numbers. The employer may be able to bully one particular employee, but will find it difficult to lord it over a union, or the entire workforce.

Similar examples abound, but let’s read a few real media examples “safety in numbers”:

1 I do not like planes because they might fall out of the sky. Cars crash, trains collide, or, as Billy Collins writes in his poem Picnic, Lightning, “the heart, no valentine” could decide without warning “to quit after lunch…” That mortality lurks in all life’s corners is an inconvenient truth. Now we can add fears of climate Armageddon to our list of existential dread, each day a new risk to index. Inertia is a common reaction to this sense of foreboding. Why change habits, spend money on renewable energy, or do anything different to “save the earth” when the planet is already doomed?

Marketing professor Vladas Griskevicius, and his colleagues offer an evolutionary perspective on the problem. They hypothesized that when we feel threatened we use the ancestral strategy of seeking safety in numbers.In the pack we feel less vulnerable, less likely to get eaten when the critter cannot see us because we blend in with the crowd. The group is our haven, our shield.

With this in mind, Griskevicius et al. tested whether fear fostered a desire for fellowship. To set the mood in one study (they did several) the researchers cued a thriller to a terrifying scene from The Shining. Half of the participants watched Jack Nicholson’s character try to kill his wife and son; the rest watched Julie Delpy and Ethan Hawke fall in love in the movie Before Sunrise. Everybody then viewed advertisements for a museum that emphasized either “social proof”– stressing popularity (“Visited by over a Million People Each Year”), “scarcity” – stressing rarity (“Stand Out from the Crowd”), or neither appeal. Just as predicted, those who found the movie scene scary were more likely to be swayed by social proof messages because the language stressed affiliation.

It seems that potent persuasion is steeped in a blend of social context and emotion. When forecasts of climate catastrophe frighten, messages such as “all your neighbors are putting up solar panels” may be more convincing then “get your solar panels before it’s too late and they are all gone.” Inspiring climate friendly action begs a nod to our companionable nature, an ear for fear, and an understanding of the synergy between the two.

- Fear fosters a desire for fellowship, by Michele Wick, PsychologyToday.com, July 16, 2013.

2 Animals that live in groups tend to be more protected from predators. That idea might be common sense, but it’s difficult to test for some species, especially for wild populations of fish that live in the ocean.

A new University of Washington study that leverages historical data has found unique support for the “safety in numbers” hypothesis by showing that Pacific salmon in larger groups have lower risk of being eaten by predators.But for some salmon species, schooling comes at the cost of competition for food, and those fish may trade safety for a meal. The study was published June 29 in the journal Science Advances.

“With salmon, most people think of them spawning in freshwater streams, but there’s also this huge amount of time they spend in the ocean feeding and growing,” said lead author Anne Polyakov, a doctoral student in the UW’s interdisciplinary Quantitative Ecology and Resource Management Program and the School of Aquatic and Fishery Sciences. “One of the reasons why this study is so unique is that we essentially can’t observe these fish at all in their natural ocean environment, and yet we’re able to pull out these really strong results on how grouping affects predation risk and foraging success for individual fish using this incredibly valuable dataset.”

The researchers looked at four species of Pacific salmon – sockeye, chum, coho and pink – drawing on an international fisheries dataset collected for these species from 1956 to 1991. While their individual life histories vary by species, all salmon are born in freshwater streams, then migrate to the ocean to feed and grow before returning to their home streams to lay eggs, spawn and die, continuing the lifecycle for the next generation.

This study relied on analyzing existing historical data in new ways. For more than four decades the UW’s Fisheries Research Institute in partnership with the International North Pacific Fisheries Commission recorded salmon catch data across the North Pacific Ocean as part of managing each species. The study’s authors analyzed catch data from purse seine nets – fishing gear that involves dropping a net and capturing all of the fish in a relatively small volume of water. By looking at numbers of fish caught in one of these nets, the researchers could estimate the size of the schools in which each fish had been swimming.

Additionally, the historical data included careful records of predator wounds on the salmon, plus the stomach contents for a subset of the fish caught. In this way, the researchers could estimate both predator encounters and feeding success for salmon across 45 years, spanning the entirety of the North Pacific Ocean – making this a unique and valuable data set.

“It was serendipitous that these data were available. They suggest that salmon are social during the ocean stage of their life and reveal the benefits and costs of this sociality,” said senior author Andrew Berdahl, an assistant professor in the UW School of Aquatic and Fishery Sciences. “Grouping is very common in marine fish and we think this is largely to help them evade predators, yet there’s actually not much empirical support showing this, especially from wild populations. I think this study is a piece of the foundation that many didn’t realize was missing.”

By looking at the number of fish caught in purse seine nets as a proxy for group size, the researchers then estimated predator risk by considering the fraction of fish in each set that had predator wounds. Fish in larger groups were much less likely to be wounded, across species. For example, with sockeye salmon, an increase in 100 fish in a group cut predation risk in half. Also, wound data showed that fish whose bodies were larger or smaller than others in their group were more likely to be attacked by a predator. This suggests that the salmon’s safety in numbers comes from confusing their predators because visually distinct – larger or smaller – individuals were easier for predators to keep track of.

- ‘Safety in numbers’ tactic keeps Pacific salmon safe from predators, Washington.Edu, June 29, 2022.

3 Both businesses and investors are facing a number of challenges, and credit availability is becoming scarce. With slowing growth and deepening inflation, direct lenders are screening their portfolio companies and potential new investments for risk.

“We’re running downside scenarios in case of rising interest rates and worsening inflation,” says Ted Denniston, co-head of direct lending at NXT Capital.

“We started to put more emphasis on forecasting prior to the pandemic,” agrees Michael Ewald, global head of private credit at Bain Capital Credit.

The firm is getting in the habit of asking, “How bad would things have to get for the company not to be able to stand a stress scenario? What’s your reason for that not happening?” Ewald adds that Bain Capital likes to run several downside scenarios on what would happen to the company if macro conditions worsen. Bain Capital has a macroeconomic group that works on modeling across the firm, including the private equity and credit departments. It was formed around the start of the pandemic and staffed with new and existing employees.

Some lenders are relying on the company’s sponsors to run their models. “Lenders are now spending a lot of time forecasting which companies might have trouble covering their fixed charge interest ratios,” says Matt Janchar, head of capital markets at private equity firm Berkshire Partners. “They’re calling us and asking for our cash flow models. A lot of the time, they will take our models and run their own scenarios to try to get ahead of where there might be problems next year

Needless to say, lenders are being cautious around new investments. While deal valuations have held up so far, they are expected to drop next year. “Completed deal volume was down markedly in the first half of 2022, while valuations for mid-market companies acquired by private equity groups and other deal sponsors held strong at an average of 7.4x EBITDA,” according to GF Data’s Fall 2022 Key Deal Terms Report. GF Data tracks deals with $10 million to $500 million in enterprise value.

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Safety in Numbers

Multibillion dollar deals by direct lenders are becoming less common, and lenders are only willing to hold a small part of a loan. Whereas previously one firm would take on a $500 million to $1 billion loan for a single credit, they’re now willing to do $100 million to $150 million in hold size, Janchar says. This is leading to a proliferation of the “club deal,” where multiple direct lenders take on portions of one large loan. In times like these, there is safety in numbers.“Everyone wants a friend. They go to the investment committee and say, ‘Who else is in this?’” Janchar says. This sometimes creates headaches for the sponsors because they now must get multiple lenders to agree on the structure and terms of a deal.

Lenders Sharpen Their Forecasting Tools, MiddleMarketGrowth.org, January 9, 2023.

About the author:

Zhang Xin is Trainer at chinadaily.com.cn. He has been with China Daily since 1988, when he graduated from Beijing Foreign Studies University. Write him at: zhangxin@chinadaily.com.cn, or raise a question for potential use in a future column.

（作者：張欣 編輯：yaning）