Stories people tell - about financial confidence or panic, housing booms, or Bitcoin - can go viral and powerfully affect economies, but such narratives have traditionally been ignored in economics and finance because they seem anecdotal and unscientific. In this groundbreaking book, Robert Shiller explains why we ignore these stories at our peril - and how we can begin to take them seriously.
Using a rich array of examples and data, Shiller argues that studying popular stories that influence individual and collective economic behaviour - what he calls 'narrative economics' - may vastly improve our ability to predict, prepare for, and lessen the damage of financial crises and other major economic events. The result is nothing less than a new way to think about the economy, economic change, and economics.
In a new preface, Shiller reflects on some of the challenges facing narrative economics, discusses the connection between disease epidemics and economic epidemics, and suggests why epidemiology may hold lessons for fighting economic contagions.
'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 'An eloquent and accessible exposition of a seductive idea.' - Tim Jackson, Nature 'Excellent.' - Gillian Tett, Financial Times 'A magisterial account.' - Steve Denning, Forbes '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