Narrative Economics: How Stories Go Viral & Drive Major Economic Events, by Robert J. Shiller. Princeton University Press. A hardcover tome with “Economics” in its title authored by a Yale professor (Nobel-winner Robert J. Shiller, no less) may strike the wary reader as a heavy lift indeed. But Shiller, who penned the bestselling Irrational Exuberance […]
Narrative Economics: How Stories Go Viral & Drive Major Economic Events, by Robert J. Shiller. Princeton University Press.
A hardcover tome with “Economics” in its title authored by a Yale professor (Nobel-winner Robert J. Shiller, no less) may strike the wary reader as a heavy lift indeed. But Shiller, who penned the bestselling Irrational Exuberance and is a regular contributor to the New York Times, delivers a highly accessible and provocative read on how popular stories influence public perceptions of economic activity and drive economic decision-making on every level.
And although Shiller’s first chapter addresses “The Bitcoin Narratives” of the present day — how the cryptocurrency that has no intrinsic value but in just a few years reached a total valuation of $300 billion — his subject matter is anything but new. Take, for example, the tulip mania that engulfed the Netherlands in the 1630s, when speculators drove up the price of tulip bulbs to dizzying heights.
A principal value of studying economics is to understand past commercial activity and, perhaps, predict the future. Ultimately, Shiller writes, “The objective of forecasting is to intervene now to change future outcomes for society’s benefit.” But predicting economic activity also influences economic outcomes: that’s how stock market bubbles form — and burst. In that sense, observed economist Kenneth E. Boulding, economics “creates the world it is investigating.”
In Narrative Economics Shiller offers a singular service in illustrating how popular stories about economic activity — spread through word of mouth, the news media and social media — affect economic outcomes. And that itself is a story worth telling.
