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Narrative Economics: How Stories Go Viral and Drive Major Economic Events - Hardcover | Diverse Reads

Narrative Economics: How Stories Go Viral and Drive Major Economic Events

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From Nobel Prize–winning economist and New York Times bestselling author Robert Shiller, a groundbreaking account of how stories help drive economic events—and why financial panics can spread like epidemic viruses

In a world in which internet troll farms attempt to influence foreign elections, can we afford to ignore the power of viral stories to affect economies? In this groundbreaking book, Nobel Prize–winning economist and New York Times bestselling author Robert Shiller offers a new way to think about the economy and economic change. Using a rich array of historical examples and data, Shiller argues that studying popular stories that affect individual and collective economic behavior—what he calls "narrative economics"—has the potential to vastly improve our ability to predict, prepare for, and lessen the damage of financial crises, recessions, depressions, and other major economic events.

Spread through the public in the form of popular stories, ideas can go viral and move markets—whether it's the belief that tech stocks can only go up, that housing prices never fall, or that some firms are too big to fail. Whether true or false, stories like these—transmitted by word of mouth, by the news media, and increasingly by social media—drive the economy by driving our decisions about how and where to invest, how much to spend and save, and more. But despite the obvious importance of such stories, most economists have paid little attention to them. Narrative Economics sets out to change that by laying the foundation for a way of understanding how stories help propel economic events that have had led to war, mass unemployment, and increased inequality.

The stories people tell—about economic confidence or panic, housing booms, the American dream, or Bitcoin—affect economic outcomes. Narrative Economics explains how we can begin to take these stories seriously. It may be Robert Shiller's most important book to date.

ISBN-13: 9780691182292

Media Type: Hardcover

Publisher: Princeton University Press

Publication Date: 10-01-2019

Pages: 400

Product Dimensions: 6.50(w) x 9.30(h) x 1.40(d)

Robert J. Shiller is a Nobel Prize–winning economist, the author of the New York Times bestseller Irrational Exuberance, and the coauthor, with George A. Akerlof, of Phishing for Phools and Animal Spirits, among other books (all Princeton). He is Sterling Professor of Economics at Yale University and a regular contributor to the New York Times. He lives in New Haven, Connecticut. Twitter @RobertJShiller

What People are Saying About This

From the Publisher

“A magisterial account.”—Steve Denning, Forbes

“Excellent.”—Gillian Tett, Financial Times

“An eloquent and accessible exposition of a seductive idea.”—Tim Jackson, Nature

“Shiller’s thorough discussion and many examples are certainly convincing as to the importance of narratives in individual economic decision-making and aggregate economic phenomena.”—Sonia Jaffe, Science

“A wonderfully enjoyable ride. . . . Shiller’s book is filled with bite-size nuggets . . . that are easily digested and provide illuminating parallels between the virality of diseases and fads and bubbles in asset prices.”—Mihir Desai, Times Higher Education

Table of Contents

List of Figures vii

Preface: What Is Narrative Economics? ix

Acknowledgments xxi

Part I The Beginnings of Narrative Economics

1 The Bitcoin Narratives 3

2 An Adventure in Consilience 12

3 Contagion, Constellations, and Confluence 18

4 Why Do Some Narratives Go Viral? 31

5 The Laffer Curve and Rubiks Cube Go Viral 41

6 Diverse Evidence on the Virality of Economic Narratives 53

Part II The Foundations of Narrative Economics

7 Causality and Constellations 71

8 Seven Propositions of Narrative Economics 87

Part III Perennial Economic Narratives

9 Recurrence and Mutation 107

10 Panic versus Confidence 114

11 Frugality versus Conspicuous Consumption 136

12 The Gold Standard versus Bimetallism 156

13 Labor-Saving Machines Replace Many Jobs 174

14 Automation and Artificial Intelligence Replace Almost All Jobs 196

15 Real Estate Booms and Busts 212

16 Stock Market Bubbles 228

17 Boycotts, Profiteers, and Evil Business 239

18 The Wage-Price Spiral and Evil Labor Unions 258

Part IV Advancing Narrative Economics

19 Future Narratives, Future Research 271

Appendix: Applying Epidemic Models to Economic Narratives 289

Notes 301

References 325

Index 351