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NARRATIVE ECONOMICS

Name: NARRATIVE ECONOMICS
Author: Robert J. Shiller
ISBN: 978-0-691-18229-2

HOW STORIES GO VIRAL AND DRIVE MAJOR ECONOMIC EVENTS

by Robert J. Shiller ‧ RELEASE DATE: Oct. 1, 2019

Wonky but of immense value to economists and policymakers working on the behavioral side of the field.

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An engaging scholarly study of the stories we tell about economic events—stories that go viral, for better or worse.

Bitcoin is the wave of the future, an anarchist challenge to national currencies meant to disguise the identity of those who hold stores of the “cryptocurrency.” It’s been valued at something around $300 billion. However, writes Nobel Prize–winning Yale economist Shiller (Finance and the Good Society, 2015, etc.), “Bitcoin has no value unless people think it has value, as its proponents readily admit.” It attains value because it’s surrounded by economic narratives, some erratic, some untrustworthy—of the sort that fuel classic bubbles: the mania of speculation that surrounded the South Sea Company, the mania for tulips, the fear-of-missing-out mania for being part of the future rather than the past. By the author’s account, narratives are too often overlooked, so that “we need to incorporate the contagion of narratives into economic theory,” recognizing them to be a driver of economic change, for good or ill. “Contagion” is a word used advisedly, for Shiller draws some of his models from epidemiology; his work also combines with the growing acknowledgment that people are often not the rational actors of classic economic theory. Accounting for narrative epidemics does not necessarily mean trying to counter them, though economic forecasts—the currently building sentiment that a major recession is about to hit, for example—are best used not to frighten but to warn, so that self-fulfilling-prophecy disasters do not in fact happen. Shiller locates one pioneering forecaster in the economist John Maynard Keynes, who warned—unsuccessfully—that placing heavy penalties on a defeated Germany after World War I would yield an even bloodier disaster powered by the thirst for vengeance. That narrative proved correct even if Ronald Reagan’s anecdotal embrace of supply-side economics proved a sham even as his stories “touched off an intense public mandate for tax cutting."

Wonky but of immense value to economists and policymakers working on the behavioral side of the field.

Pub Date: Oct. 1, 2019

ISBN: 978-0-691-18229-2

Page Count: 384

Publisher: Princeton Univ.

Review Posted Online: Aug. 3, 2019

Kirkus Reviews Issue: Sept. 1, 2019

Categories:

PSYCHOLOGY | BUSINESS | ECONOMICS | GENERAL BUSINESS

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GOOD ECONOMICS FOR HARD TIMES

by Abhijit V. Banerjee & Esther Duflo ‧ RELEASE DATE: Nov. 12, 2019

Occasionally wonky but overall a good case for how the dismal science can make the world less—well, dismal.

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“Quality of life means more than just consumption”: Two MIT economists urge that a smarter, more politically aware economics be brought to bear on social issues.

It’s no secret, write Banerjee and Duflo (co-authors: Poor Economics: A Radical Rethinking of the Way To Fight Global Poverty, 2011), that “we seem to have fallen on hard times.” Immigration, trade, inequality, and taxation problems present themselves daily, and they seem to be intractable. Economics can be put to use in figuring out these big-issue questions. Data can be adduced, for example, to answer the question of whether immigration tends to suppress wages. The answer: “There is no evidence low-skilled migration to rich countries drives wage and employment down for the natives.” In fact, it opens up opportunities for those natives by freeing them to look for better work. The problem becomes thornier when it comes to the matter of free trade; as the authors observe, “left-behind people live in left-behind places,” which explains why regional poverty descended on Appalachia when so many manufacturing jobs left for China in the age of globalism, leaving behind not just left-behind people but also people ripe for exploitation by nationalist politicians. The authors add, interestingly, that the same thing occurred in parts of Germany, Spain, and Norway that fell victim to the “China shock.” In what they call a “slightly technical aside,” they build a case for addressing trade issues not with trade wars but with consumption taxes: “It makes no sense to ask agricultural workers to lose their jobs just so steelworkers can keep theirs, which is what tariffs accomplish.” Policymakers might want to consider such counsel, especially when it is coupled with the observation that free trade benefits workers in poor countries but punishes workers in rich ones.

Occasionally wonky but overall a good case for how the dismal science can make the world less—well, dismal.

Pub Date: Nov. 12, 2019

ISBN: 978-1-61039-950-0

Page Count: 432

Publisher: PublicAffairs

Review Posted Online: Aug. 28, 2019

Kirkus Reviews Issue: Sept. 15, 2019

Categories:

- SEEN & HEARD
Bill Gates Shares His Summer Reading List

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MASTERY

by Robert Greene ‧ RELEASE DATE: Nov. 13, 2012

Readers unfamiliar with the anecdotal material Greene presents may find interesting avenues to pursue, but they should...

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Greene (The 33 Strategies of War, 2007, etc.) believes that genius can be learned if we pay attention and reject social conformity.

The author suggests that our emergence as a species with stereoscopic, frontal vision and sophisticated hand-eye coordination gave us an advantage over earlier humans and primates because it allowed us to contemplate a situation and ponder alternatives for action. This, along with the advantages conferred by mirror neurons, which allow us to intuit what others may be thinking, contributed to our ability to learn, pass on inventions to future generations and improve our problem-solving ability. Throughout most of human history, we were hunter-gatherers, and our brains are engineered accordingly. The author has a jaundiced view of our modern technological society, which, he writes, encourages quick, rash judgments. We fail to spend the time needed to develop thorough mastery of a subject. Greene writes that every human is “born unique,” with specific potential that we can develop if we listen to our inner voice. He offers many interesting but tendentious examples to illustrate his theory, including Einstein, Darwin, Mozart and Temple Grandin. In the case of Darwin, Greene ignores the formative intellectual influences that shaped his thought, including the discovery of geological evolution with which he was familiar before his famous voyage. The author uses Grandin's struggle to overcome autistic social handicaps as a model for the necessity for everyone to create a deceptive social mask.

Readers unfamiliar with the anecdotal material Greene presents may find interesting avenues to pursue, but they should beware of the author's quirky, sometimes misleading brush-stroke characterizations.