Fear is good, obviously. If not for fear, I wouldn't be sitting here typing this drivel because my ancestors back on the African savannah wouldn't have made it to reproductive age. Unfortunately, the primal emotion isn't as adaptive as it used to be in the wondrous world of today.
I'm not a psychologist, so I really just have a drive-by perspective on the basic mechanisms, but here's how it seems to me (for whatever it's worth). We have some hard-wired propensities to fear the obvious stuff like snakes, large arachnids, big animals with claws and sharp teeth. Of course we have more abstract fears of death and pain and - now this is important - one of our most common and strongest fears is of loneliness and social isolation. That's because we are fundamentally social animals, we aren't built to make it on our own.
The dangerous animals thing isn't generally relevant any more. The abstract objects of fear, except in rare circumstances when, for example, the bus is headed straight at you, don't present themselves directly. They are socially constructed. Chimpanzees have alarm calls which set the whole troop panicking. We have much more elaborate vocalizations with syntax and thousands of symbolic elements, so we don't just yell "leopard!" or "baboon!" We tell each other elaborate stories about what to be afraid of.
This sounds like a useful adaptation, right? "Don't walk in the south end of the park after dark" is quite specific. You can still go there during the day, and you can go to the north end in the evening. But this faculty works very weirdly.
Here, for example, are two stories from today's news about actions by the Chinese authorities. In Hubei province, government officials have a policy of promoting cigarette smoking to boost the local economy. Departments have to budget for the purchase of half a million dollars worth of cancer sticks every year, and state employees are tasked with a goal of personally consuming a quarter of a million packs a year of locally produced brands. At the same time, Chinese officials elsewhere have essentially imprisoned dozens of foreign travelers over swine flu fears, even though the people have no symptoms.
This may strike you as odd public policy, but the analogous individual behavior is commonplace here in the United States. Doctors routinely threaten people with death if they don't take the pills, stop smoking, lose weight, etc., but it does little or no good. But the same people want immigration stopped because they are convinced that Mexicans import diseases. That didn't start with the flu scare, by the way. I would not normally link to World Net Daily but when they are making fools of themselves this profoundly I'll make an exception.
"[M]any illegal aliens harbor fatal diseases that American medicine fought and vanquished long ago, such as drug-resistant tuberculosis, malaria, leprosy, plague, polio, dengue, and Chagas disease."
In other words, people can flat out lie in order to manipulate our fears. George W. Bush told us that if we didn't invade Iraq, Osama bin Laden would destroy our cities with nuclear weapons. Even the most mildly enterprising skepticism could have completely debunked this absurd claim, but doubt was not permitted. Instead, Dick Cheney's lieutenants told it to Judith Miller, she wrote it down, they printed it on the front page of the New York Times, and then Dick Cheney went on TV and said "You don't have to take it from me -- it's in the New York Times!"
The only explanation I can see for such a profound institutional failure is that lots of people, including the editors of our major news media, wanted a specific object of fear. They had vague anxieties after the Sept. 11 events, and that was just too uncomfortable. They needed a focus, a simple story that could lead to a dramatic resolution. Let's just bomb us some Arabs and get this thing over with.
So I think there's a generalizable social psychological mechanism here. We live continually with anxiety. This is an era of continual, rapid change; there are a lot of vague threats out there that most people barely grasp; people's lives are often unstable and insecure. So these fear fads erupt, possibly as the result of a plot, as in the case of the Bush administration; often more or less stochastically, as with shark attacks and infectious disease scares. In the latter case, it sometimes starts with some legitimate concern by authorities but their precautionary actions and pronouncements get amplified by the mass media into a prophecy of doom. Sometimes, as with the West Nile virus obsession of a few years ago, it's pretty much a crock from the beginning, intense, hyperventilating perseveration on a minor problem.
The fact is, we like to be scared. That's why we go to horror movies and go on thrill rides at amusement parks. That way we get it over with and we can go ahead and light up the Camel. Or something.