Narrative Economics
- (pp. 967-1004)
Abstract
This address considers the epidemiology of narratives relevant to economic fluctuations. The human brain has always been highly tuned toward narratives, whether factual or not, to justify ongoing actions, even such basic actions as spending and investing. Stories motivate and connect activities to deeply felt values and needs. Narratives "go viral" and spread far, even worldwide, with economic impact. The 1920-1921 Depression, the Great Depression of the 1930s, the so-called Great Recession of 2007-2009, and the contentious political-economic situation of today are considered as the results of the popular narratives of their respective times. Though these narratives are deeply human phenomena that are difficult to study in a scientific manner, quantitative analysis may help us gain a better understanding of these epidemics in the future.Citation
Shiller, Robert J. 2017. "Narrative Economics." American Economic Review, 107 (4): 967-1004. DOI: 10.1257/aer.107.4.967Additional Materials
JEL Classification
- D72 Political Processes: Rent-Seeking, Lobbying, Elections, Legislatures, and Voting Behavior
- E32 Business Fluctuations; Cycles
- G01 Financial Crises
- N10 Economic History: Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations: General, International, or Comparative