Narrative Economics

Robert Shiller

No 2069, Cowles Foundation Discussion Papers from Cowles Foundation for Research in Economics, Yale University

Abstract: This address considers the epidemiology of narratives relevant to economic fluctuations. The human brain has always been highly tuned towards 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 1920-21 Depression, the Great Depression of the 1930s, the so-called "Great Recession" of 2007-9 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.

Keywords: Economic fluctuations; Business cycles; Story; Meme; Epidemic; SIR model; Kermack and McKendrick; Multipliers; Bubbles; Depression of 1920; Profiteer; Great Depression; Stock market crash; 2008 financial crisis; Post-truth (search for similar items in EconPapers)
JEL-codes: E00 E03 E30 G02 N1 (search for similar items in EconPapers)
Pages: 57 pages
Date: 2017-01
New Economics Papers: this item is included in nep-his, nep-hpe and nep-mac
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Citations: View citations in EconPapers (72)

Published in American Economic Review, (March 2017), 107 (4): 967-1004

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Journal Article: Narrative Economics (2017)
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