Folklore is a term which refers to the collective oral traditions and beliefs of a culture. It encompasses myths, legends, jokes, proverbs, tall tales, fairy tales, superstition, and of course folktales. All cultures have some form of folklore; some people have made the study of folklore their life's work, and numerous texts by folklorists can be found in bookstores. These books include transcriptions of folk stories as well as analysis of popular myths and traditions and the ways in which folklore impacts modern society.
The term was coined in 1846 by William Thomas, who wanted to come up with a generic term to encompass the rich oral traditions of cultures around the world. “Folklore” is a compound of “folk,” as in common people, and “lore” as in knowledge or traditions. The definition of folklore is quite varied, depending on the academic you discuss it with. In general, to be considered folklore, something has to be passed down orally through multiple generations, whether it be an adage about the rain or a folktale about a popular hero like the American Paul Bunyan.
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Folklore and folk beliefs in various cultures are incredibly varied. Various animals, for example, are considered ill omens in some regions of the world while they are welcomed as bringers of luck in other areas. Folk stories are also quite diverse, and they usually integrate natural features of the landscape, whether these features be long, hard winters in Scandinavia or endless sunny days at the equator. A glimpse of a culture's folklore can often reveal interesting things about the people of that culture.
Oral traditions constantly undergo change because of their nature. As stories are repeated, people embellish or alter them, sometimes changing the content to fit with new ideas or the times. As a result, folklore is a constantly expanding and changing body of material, providing a great deal of fodder for people who are interested in oral cultural traditions. Some students of folklore have tracked the changes in the oral traditions they study as part of a larger study of cultural changes and trends; for example, folklore often undergoes major shifts after people meet people from other cultural backgrounds.
When the study of folklore became a more formal discipline, people started writing down folktales, although people like the Brothers Grimm had already gotten a head start on recording their oral traditions on paper. Some museums also have a collection of folk items, along with stories about their provenance. You may have an example of recorded folklore in your own home, and you can probably come up with some examples of classic folklore or folk characters in your own culture.