A social currency trap is where people are trapped by their own minds into a course of behavior that is harmful to them when another that is better is available. Friends who drink and have bad habits are an example.
However, a skills and drills curriculum that ignores New Math, set theory, Peano Axioms, proofs of natural number laws is another trap. The right way currently has no social currency to speak of. So people stay on the wrong way. They can’t get off.
Risk management of financial institutions is another example that is social currency trapped. They don’t use a regime switching scenario generator that can produce long episodes of low rates such as we have now. They instead continue to use old models like Academy of Actuaries SLV and my old DMRP model often called Two Factor Black Karasinksi. These models can’t produce a shift to 5 percent rates very quickly as another limitation. If yields rise, bond prices fall. So the risk of buying long term bonds is not adequately addressed by these models. But risk management lacks the social currency critical mass to talk about this so nothing changes.
The DMRP classic as I call it is widely used in Europe where it has social currency from the actions of a vendor for Solvency II. The Regime Switching DMRP that I sell has no social currency, so even though it includes DMRP Classic as a special case, very few people use it.
The European countries could easily experience extreme regime switching on short notice, but they continue to use the DMRP without regime switching because it is entrenched in social currency terms.
My webpage on Regime Switching Economic Scenario Generators indicates the weakness of the SLV in some graphs comparing it to the RS-DMRP. The DMRP classic is better than SLV with high volatility parameterizations but still inadequate.
Within large financial institutions there is a lack of a critical mass of people who understand models to create enough discussion. Outside of companies, there is not enough actual results of models presented to start or carry a discussion. So risk management in our society lacks the social currency to be done correctly.
In the same way, teaching Peano Axioms in K-8 has no social currency. So we persist with skills and drills and high stakes testing that seems coerced and otherwise almost meaningless to students, parents and teachers. A better way is available but people don’t switch to it because it lacks social currency.