Narrative Economics: How Stories Go Viral and Drive Major Economic Events, by Robert J. Shiller
From Nobel Prize–winning economist and New York Times bestselling author Robert Shiller, a new way to think about how popular stories help drive economic events
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.
"In this highly readable and entertaining book, Robert Shiller, extending the idea of contagious narratives with profound economic effects beyond stock-market and housing bubbles, ranges widely from old debates about the gold standard to the latest impacts of artificial intelligence. Narrative Economics contains a treasure of priceless quotations and examples and breaks new ground by tracing key words and phrases as they go viral and eventually fade away."―Robert J. Gordon, New York Times bestselling author of The Rise and Fall of American Growth
"This is a fascinating and important book, written in an engaging style and packed with intriguing examples."―Diane Coyle, University of Cambridge
"Ambitious and absorbing, Narrative Economics takes seriously the possibility that stories may have an economic life of their own, spreading through communities like epidemics, and it makes an extremely compelling case that studying such stories is important. The book is also a joy to read―lively, engaging, and accessible."―Rajiv Sethi, Barnard College, Columbia University
"What causes the recurrent bubbles and busts in financial markets that create so much disruption in our lives? Economists have explored all sorts of possible causes, from subtle changes in monetary policy to the solar sunspot cycle. In this fascinating book, Robert Shiller argues that what really matters is a good story. Narrative economics, he argues, can explain what statistics miss, and shows how viral shifts in economic thinking resemble real epidemics."―John Quiggin, author of Economics in Two Lessons
October 1, 2019