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Narrative Economics: How Stories Go Viral and Drive Major Economic Events

3.61  ·  Rating details ·  1,014 ratings  ·  132 reviews
From Nobel Prize-winning economist and New York Times bestselling author Robert Shiller, a groundbreaking account of how stories help drive economic events--and why financial panics can spread like epidemic viruses

In a world in which internet troll farms attempt to influence foreign elections, can we afford to ignore the power of viral stories to affect economies? In this
Hardcover, 400 pages
Published October 1st 2019 by Princeton University Press
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Oct 07, 2019 rated it did not like it  ·  review of another edition
Shelves: economics, dnf
The author claims there is a need on economic theory to understand not only metrics, but narratives that create reality and affect economic decisions. I think this is the only point where we agree.

The first red flag for me is lack of references for Dawkins’ Memetics, nor Network and Web Science literature. Yes, epidemiology has been working on this for a long time, but there are at many other disciplines that have made important contributions to similar problems. The dismissal of those areas (in
Daniel Kenefick
Jan 06, 2020 rated it liked it
Not bad, although I was hoping for a bit more of how economists (should?) study narratives, rather than a description of the narratives themselves. While it is interesting (and surprising!) to hear how ideas like anti-technological sentiment, the idea of basic income, anti-business and anti-labor sentiment have waxed, waned, and interacted over the years, this reads more like an economic history than the "new thing" in economics.

My favorite parts were the first part, where the author made conne
Oct 12, 2019 rated it liked it
Good if you haven't already read Shiller's many other books, such as Irrational Exuberance, where this information is already covered. Needs to take the next step and ground this hypothesis in some empirical testing. But as someone who has studied BOTH linguistics AND economics in grad school, I find the premise intriguing and well worth further research. ...more
Chris Esposo
Apr 03, 2020 rated it it was amazing  ·  review of another edition
You can’t time/call booms/recessions of economies, or tops/bottoms in the stock market. Most economists, including Bob Shiller, would agree with this statement. Yet, ironically, it is exactly Bob Shiller who in the past 3 major recessions, including the forthcoming recession of 2020, who has presaged each recession either by releasing a book that anticipated trouble, and explained the cause of that trouble (“Irrational Exuberance” published in 2000), or was actively on news media warning of trou ...more
Sep 16, 2019 marked it as to-read
"I don’t know how he takes bad news; I think he denies it, he claims it’s a lie. I don’t know what he’ll do if the stock market were to crash now. What could he do? He would blame the Federal Reserve, that’s for sure.”
Nov 25, 2019 rated it it was amazing  ·  review of another edition
Shiller is a Nobel Prize winning economist who is known for “behavioral economics”, an area of study that emphasizes the aspects of economics that have steered away from the much more common emphases of the field on high levels of focused goal directed optimizing behavior by smart decision makers with lots of information and knowledge of how to process that information.

The idea here is that economic decisions are not the result of human computers but more the result of more limited (bounded rati
Kent Winward
Dec 08, 2019 rated it it was amazing
Shiller's take on economics intrigues me and he greatly informed my views on finance/debt in The Subprime Solution: How Today's Global Financial Crisis Happened, and What to Do about It and Finance and the Good Society.

In his latest book, he takes behavioral economics into the realm of the society's behavior and the stories we tell ourselves about economics. This book is more of an outline of a theory that needs data and exploration, but the biggest takeaway I gained wasn't one that was explici
Apr 25, 2020 rated it really liked it  ·  review of another edition
Robert Shiller is a first rate economist and writer. His Irrational Exuberance at the start of the 2000s was a landmark. His latest book argues that in order to understand what is going on in the economy one needs to understand the underlying narratives that we use to explain complex events. He suggests that these narratives ebb and flow over time and he tries to explain why some narratives become prominent and then disappear. He also suggests that competing narratives may become more prominent ...more
Oct 27, 2019 rated it it was amazing  ·  review of another edition
The author invites us to look at major US economic events from the past two centuries not just as a simple mix of economic policies and indicators, but also in the light of prevailing economic narratives that spread virally throughout the population. The author establishes a link between the spread of economic narratives and epidemiology – the science of how diseases spread –, and a significant part of the book is dedicated to the historical analysis of the spread and various mutations of popula ...more
Warren Mcpherson
An exploration of how common narratives relate to economic events and trends.
The book reviews narratives that coincided with economic upturns, downturns, wars, and hyperinflation. Several of the insights are quite interesting and show some of the differences between what we hear after the fact and what people were thinking at the time. As logical as these insights are they tend to be a little anticlimactic.
The book is intended to promote the idea of further study into connections between popular
Dec 09, 2019 added it
In theory, I love this book. It is so educational and I love how it goes against the standard economics we learn in school. Most of the time economics is based on the assumption that all people act rationally, which just is not true. I love the idea that popular narratives largely impact economic consequences. However, when I checked this book out, I forgot that this is an economic book. As interesting as it is, it reads quite like a textbook. I made it 6 chapters in (and really enjoyed the cont ...more
Humberto Rd
Oct 15, 2019 rated it liked it
Falls short of expectations considering all the hype it received before it was released.

It is good, but its is behind Irrational Exuberance and probably on par with Animal Spirits
May 06, 2020 rated it it was amazing
This is a story about how viral stories change economic behaviour and therefore economies. Viral stories behave like actual viruses leading to ‘economic epidemics’, something we are all too familiar with during this Covid-19 period.

Anyways stories can be long or short, can be only discussed in certain circles, they need vivid images and a celebrity endorsement. Truth is not as viral as fake news.

So if everyone thinks Bitcoin will only go up, it will go up indeed. If everyone wants to save, the
Angie Boyter
Feb 11, 2020 rated it it was ok
I became more and more unhappy and impatient with this book as I read it, and I looked up what I wrote about Shiller's book Phishing for Phools. I said there that the authors came across rather as old fuddy duddies. I think that may be true here also.
He has a rather good metaphor here and some good food for thought for economists.
There is enough for a long article or VERY short book , but the presentation is overdone, drawn out, and repetitive. There were some interesting factoids, like the fac
Bruno Badilescu
Aug 25, 2020 rated it it was ok
He may be a winner of a Nobel Prize, but I’m sure he got that before writing this book. If he hadn’t, then he would’ve been laughed not just out of the contention for the prize, but off the entire Scandinavian peninsula where the Swedes decide who wins these things.

If you want to read the same sentence, in approximately 5740 different ways across 247 pages, then this is the book for you.

I found the appendix more diverse and informative than the actual content

Imagine if you will, two cavemen i
Dec 15, 2020 rated it really liked it
The author takes a look at economic narratives/beliefs through the lens of epidemiology. He posits that an economic story's virality, which may or may not have anything to do with how true the narrative is, can give it the power to shape the economy in major ways.
After explaining this perspective, the author then guides in seeing major economic events over the last hundred or so years through this perspective.

Overall, I think this book provides a very good picture of what his thesis is and how
Antonio Skarica
Honestly, I couldn’t finish it. The overall premise is so clear, intuitive and easy to understand. Why Shiller spends 300 pages trying to make it seem like a novel idea, makes no sense to me. I’ve been a big follower of Shiller ever since I read Animal Spirits in college. He’s one of the most relevant economists of our time. Maybe that’s why such a clear idea would seem so mind blowing to him, as it stands out from mainstream economic models. But at the same time he’s been all about behavioral e ...more
Justin Fanelli
Jan 06, 2020 rated it really liked it
Different and excellent
Neil Browning
Feb 29, 2020 rated it it was ok
Economist justifies a vague concept using google ngrams.
Masatoshi Nishimura
Jan 02, 2021 rated it liked it
Shelves: history, economics
The book is full of anecdotal stories. You may find them interesting to follow. The premise of the book is to say economics has much human emotion and irrationality aspect.

As for me, I came through this book for a predictive value. For example, is coronavirus leading to depressive economics or government pumping in offsetting our negative emotion? How can I analyze that from reading "current" news objectively? To my disappointment, Robert doesn't offer that predictive toolset.
Jul 28, 2020 added it
so it is political economy?
Lorenzo Barberis Canonico
I liked the book (although it's not my favourite Shiller book by far) and it nicely connects to the concept of "narrative violations" in Silicon Valley (

It makes sense given Shiller's behavioral focus in his most recent work that he would extend his analytical toolkit for bubbles to sociological epidemics of all kinds. The first half is the theory, the second half are the examples.

In the roundtable following his acceptance of the Nobel Prize, Shiller me
Marcel Santos
Dec 22, 2019 rated it it was amazing
This book takes one topic its author had already slightly addressed in other works (I saw it in “Animal Spirits”, but have seen people commenting it is also present in “Irrational Exuberance”) and deepens the research on it.

In the book “Misbehaving”, Richard Thaler, one of the founders of Behavioral Economics (BE), had mentioned that he was missing more development of the study associating BE with Macroeconomics, once it is natural for BE to have a connection first with Microeconomics. So “Narra
Nov 22, 2020 rated it it was amazing
This review has been hidden because it contains spoilers. To view it, click here.
Richard Marney
Sep 30, 2019 rated it really liked it
This book is an important addition to the literature of behavorial economics.

We all remember our parents telling us, "that may have not been what you intended, but ultimately, 'perception becomes reality'". The seeds of a story (impression, interpretation, speculation, etc.) can metastasize into Shiller's "narratives" and influence or even drive macroeconomic events. Likening the spread of economic narratives to medical contagion, Dr. Shiller helps us understand better their transmission, recov
Etienne RP
Dec 31, 2019 rated it liked it
The Narrative Turn in Economics: A review of Robert J. Shiller, Narrative Economics: How Stories Go Viral & Drive Major Economic Events, Princeton University Press, 2019.

Scholars used to start their books or dissertations with definitions of key concepts taken from the dictionary. Now they use the Internet to provide trends in word patterns. Some words or expressions suddenly appear on social media or search engines and spread like wildfire. By going back in time into the print archive, it is no
Feb 02, 2020 rated it really liked it
This review has been hidden because it contains spoilers. To view it, click here.
X Li
Jun 27, 2020 rated it really liked it
Adam Smith is often credited as the father of modern economics. His book, the Wealth of Nations is cited as having laid the foundations for a discipline based on using reasonable incentives to make decisions of a social nature. And as we cite his notion of markets working by the mechanisms of an "invisible hand", we are in fact acknowledging the contributions of (though few of us can honestly claim to have read the full-text) his earlier work: "The Theory of Moral Sentiments". That the scope of ...more
Dec 01, 2020 rated it liked it
40 years ago, when I was a young antitrust attorney for the Federal Trade Commission and then the US Senate Judiciary Committee, I would get into the same, old argument with the economists on staff: whether humans were really "rational utility maximizers" or at least partially irrational agents, swayed by advertising, peer pressure and other non-calculable influences. The economists would routinely shrug or eyeroll over the notion that there was anything about human behavior that could not be ca ...more
Marko Cadez
Jul 04, 2020 rated it it was amazing

Here we are with new great book. There is a new term you "must know about" in order to navigate turbulent downturn of economic theories and it's: CONTAGION. After economical theorists being stuck explaining people irrational behavior in pure metrics and numbers there is a new "going beyond" masterpiece of Nobel Prize-winning economist Robert Schiller. NARRATIVE ECONOMICS opens the issue of stories that, in complex cumu
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Robert James "Bob" Shiller (born Detroit, Michigan, March 29, 1946) is an American economist, academic, and best-selling author. He currently serves as the Arthur M. Okun Professor of Economics at Yale University and is a Fellow at the Yale International Center for Finance, Yale School of Management. Shiller has been a research associate of the National Bureau of Economic Research (NBER) since 198 ...more

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“Trying to understand major economic events by looking only at data on changes in economic aggregates, such as gross domestic product, wage rates, interest rates, and tax rates, runs the risk of missing the underlying motivations for change. Doing so is like trying to understand a religious awakening by looking at the cost of printing religious tracts.” 1 likes
“We need to incorporate the contagion of narratives into economic theory. Otherwise, we remain blind to a very real, very palpable, very important mechanism for economic change, as well as a crucial element for economic forecasting. If we do not understand the epidemics of popular narratives, we do not fully understand changes in the economy and in economic behavior.” 1 likes
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