NARRATIVE ECONOMICS by Robert J. Shiller

Author: Robert J. Shiller is a Nobel Prize winning economist (in fact there is no such thing as a Nobel Prize in Economics, thus better if we call it The Sveriges Riksbank Prize in Pseudo-Economic Sciences in Memory of Alfred Nobel). He is Sterling professor of Economics at Yale.

Book: In his book, Mr. Shiller argues that studying popular stories that affect individual and collective human behaviour, that is, narrative economics, we can improve our ability to predict, prepare for, and lessen the damage of financial crises and other major economic events. Narratives are spread by word of mouth, the media, and increasingly by social media. Thought the book he analyses some of the most popular narratives in history and tries to explain how to handle them seriously. Opinion: Shiller is one of the very few Keynesian economists I like. However, this book has upset me a lot. Again, he could reduce the book by 90% and no valuable information would be lost. While there are some interesting aspects of the idea, such as the epidemic models in the appendix or some propositions regarding the contagion of narratives, too much BS is presented in my view. When explaining most of the narratives, it seems to me that he misses the key point, which is that most of the times it is central planners interventions or a fraudulent system (Fractional Reserve Banking) what causes the main problems. I still do not understand why it is “irrational” to withdraw your savings, when the bank only maintains a small portion of it and in any instance it can be blown up. Rationality is about survival.

Key Stats:

- Pages: 400

- Level: Beginner

- Mark: 4/10