Narrative Economics Quotes

“narratives are major vectors of rapid change in culture, in zeitgeist, and in economic behavior.”
― Robert J. Shiller, Narrative Economics: How Stories Go Viral and Drive Major Economic Events

“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.”
― Robert J Shiller, Narrative Economics: How Stories Go Viral and Drive Major Economic Events

“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.”
― Robert J. Shiller, Narrative Economics: How Stories Go Viral and Drive Major Economic Events

“Government’s view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.23”
― Robert J. Shiller, Narrative Economics: How Stories Go Viral and Drive Major Economic Events

“the business of statesmanship is to invent new terms for institutions which under their old names have become odious to the public.”
― Robert J Shiller, Narrative Economics: How Stories Go Viral and Drive Major Economic Events

“As the mathematical model in the appendix shows, a high contagion parameter and a low recovery rate mean that almost the whole population eventually hears the narrative, sometimes very quickly. But the same narrative can reach most of the population rather slowly if the contagion parameter is low but the recovery rate is even lower.”
― Robert J. Shiller, Narrative Economics: How Stories Go Viral and Drive Major Economic Events

“If one searches newspapers of the twentieth century for contemporary explanations of recessions as they begin, one finds that most talk concerns leading indicators rather than ultimate causes. For example, economists tend to bring up central bank policy, or confidence indexes, or the level of unsold inventories. But if asked what caused the changes in these leading indicators, they are typically silent. It is usually changing narratives that account for these changes, but there is no professional consensus regarding the most impactful narratives through time. Economists are reluctant to bring up popular narratives that they have heard that seem important and relevant to forecasts, since their only source about the narratives is hearsay, friends’ or neighbors’ talk. They usually have no way of knowing whether similar narratives were extant in past economic events. So, in their analyses, they do not mention changing narratives at all, as if they did not exist.”
― Robert J. Shiller, Narrative Economics: How Stories Go Viral and Drive Major Economic Events

“The intelligent machines narratives (chapters 13 and 14) are still much talked about, though they do not seem to have much economic impact at the moment. Machines do not seem to be very scary at the time of this writing, but should there be some adverse news about income inequality or unemployment, the contagion of scary forms of this narrative could reappear. A sudden increase in concerns about robots has happened before. A search on ProQuest News & Newspapers for articles containing both robot and jobs reveals that the number of articles almost tripled between the last six months of 2007 and the first six months of 2009. According to the National Bureau of Economic Research, December 2007 was the peak month before the Great Recession, and the recession ended in June 2009.”
― Robert J. Shiller, Narrative Economics: How Stories Go Viral and Drive Major Economic Events

“The keep-up-with-the-Joneses narrative (discussed in chapter 11) seems especially strong at this writing in the United States. President Donald J. Trump models ostentatious living. In addition, there appears to be less generosity toward hungry families. There had been a distinct downtrend in US charitable giving for basic needs even before Trump’s presidency. Research at the Indiana University Lilly Family School of Philanthropy reveals a 29% decline in real, inflation-corrected, basic-needs charity from 2001 to 2014.2 These declines in the modesty and compassion narratives extend to a lower willingness to help the world’s emerging countries.”
― Robert J. Shiller, Narrative Economics: How Stories Go Viral and Drive Major Economic Events

“Aristotle, around 350 BCE, raised the possibility of machines replacing humans: For if every instrument could accomplish its own work, obeying or anticipating the will of others, like the statues of Daedalus, or the tripods of Hephaestus, which, says the poet, “of their own accord entered the assembly of the Gods”; if, in like manner, the shuttle would weave and the plectrum touch the lyre without a hand to guide them, chief workmen would not want servants, nor masters slaves.”
― Robert J. Shiller, Narrative Economics: How Stories Go Viral and Drive Major Economic Events

“The world solidly abandoned the gold standard in 1971. Since then, countries have used fiat money—that is, money not backed by anything.”
― Robert J. Shiller, Narrative Economics: How Stories Go Viral and Drive Major Economic Events

“As a result, the American Dream became extremely useful in pitches for consumer products that encourage potential purchasers to feel better about their purchases, such as a new home or a second car. In fact, ProQuest News & Newspapers shows that more than half the use of the phrase American Dream has occurred in advertisements rather than articles.”
― Robert J. Shiller, Narrative Economics: How Stories Go Viral and Drive Major Economic Events

“The phrase American Dream has a ring of truth to it as a statement of American values. The United States is a proud country that has no aristocracy, allows no titles or royalty, announces in its Declaration of Independence that “all men are created equal,” and allows free enterprise to proceed with little government interference. However, it is also a country that permitted slavery until 1863.”
― Robert J. Shiller, Narrative Economics: How Stories Go Viral and Drive Major Economic Events

“Rumor is the ancient Latin word for contagious narrative.”
― Robert J. Shiller, Narrative Economics: How Stories Go Viral and Drive Major Economic Events

“Other narratives in the same constellation with the Laffer curve sprang up around the same time. The terms leveraged buyouts and corporate raiders also went viral in the 1980s, often in admiring stories about companies that responded well to true incentives and that produced high profits as a result. One marker for such stories is the phrase maximize shareholder value, which, according to ProQuest News & Newspapers and Google Ngrams, was not used until the 1970s and whose usage grew steadily until the twenty-first century. The phrase maximize shareholder value puts a nice spin on questionable corporate raider practices, such as saddling the company with extreme levels of debt and ignoring implicit contracts with employees and stakeholders. Maximize suggests intelligence, science, calculus. Shareholder reminds the listener that there are people whose money started the whole enterprise, and who may sometimes be forgotten. Value sounds better, more idealistic, than wealth or profit. Use of the three words together as a phrase is an invention of the 1980s, used to tell stories of corporate raiders and their success. The term maximize shareholder value is a contagious justification for aggressiveness and the pursuit of wealth, and the narratives that exploited the term are most certainly economically significant.”
― Robert J. Shiller, Narrative Economics: How Stories Go Viral and Drive Major Economic Events

“The “technology is taking over our lives” narrative is the most recent incarnation of a labor-saving-machinery narrative that has scared people since the Industrial Revolution.”
― Robert J. Shiller, Narrative Economics: How Stories Go Viral and Drive Major Economic Events

“traditional economic approaches fail to examine the role of public beliefs in major economic events—that is, narrative. By incorporating an understanding of popular narratives into their explanations of economic events, economists will become more sensitive to such influences when they forecast the future. In doing so, they will give policymakers better tools for anticipating and dealing with these developments.”
― Robert J. Shiller, Narrative Economics: How Stories Go Viral and Drive Major Economic Events

“Narrative economics demonstrates how popular stories change through time to affect economic outcomes, including not only recessions and depressions, but also other important economic phenomena. The idea that house prices can only go up attaches to the stories of rich house flippers seen on television. The idea that gold is the safest investment attaches to stories of war and depression. These narratives have a contagious element, even if their attachment to any given celebrity is tenuous.”
― Robert J. Shiller, Narrative Economics: How Stories Go Viral and Drive Major Economic Events

“Contagion is strongest when people feel a personal tie to an individual in or at the root of the story, whether a stock personality type or a real celebrity.”
― Robert J. Shiller, Narrative Economics: How Stories Go Viral and Drive Major Economic Events

“The lesson is that history, including economic history, is not the logically ordered sequence of events that is presented by subsequent narratives that try to make sense of it or try to achieve public consensus. Major things happen because of seemingly irrelevant mutations in narratives that have slightly higher contagion rates, slightly lower forgetting rates, or first-mover effects that give one set of competing narratives a head start. These random events can feed back into bigger and more pervasive narrative constellations,”
― Robert J. Shiller, Narrative Economics: How Stories Go Viral and Drive Major Economic Events

“No somos conscientes de nuestra divinidad; de que somos parte del gran principio de causalidad del universo. No sabemos cuál es nuestra fuerza y sin saberlo no podemos usarla.”
― Robert J. Shiller, Narrativas económicas: Cómo las fake news y las historias virales afectan la marcha de la economía (Deusto)

“Paul J. Zak, a neuroeconomist, has shown experimentally that narratives with a “dramatic arc” increase levels of the hormones oxytocin and cortisol in the listener’s bloodstream, as compared with more “flat” narratives.4 These hormones in turn have well-documented effects on behavior. Oxytocin, sometimes called the “love hormone,” plays a role in facilitating relationships. Cortisol, sometimes called the “stress hormone,” has been shown to play a role in regulating blood sugar, assisting memory formation, and reducing inflammation.”
― Robert J. Shiller, Narrative Economics: How Stories Go Viral and Drive Major Economic Events

“Booker (2004) argues that there are only seven basic plots: “overcoming the monster, rags to riches, the quest, voyage and return, comedy, tragedy, and rebirth.”
― Robert J. Shiller, Narrative Economics: How Stories Go Viral and Drive Major Economic Events

“It has been difficult for scholars to research popular narratives, focusing on the core elements that make them contagious, without being accused of taking sides in political, or sometimes religious, controversies.”
― Robert J. Shiller, Narrative Economics: How Stories Go Viral and Drive Major Economic Events

“unlike economists, the general public believed in a wage lag hypothesis: the idea that wage increases would forever lag behind price increases, and therefore that inflation had a direct and long-term negative impact on living standards. In short, the wage-price spiral offered a geometrical mental image of one’s economic status spiraling down for as long as strong aggressive demands of labor kept it happening.”
― Robert J. Shiller, Narrative Economics: How Stories Go Viral and Drive Major Economic Events

“we don’t want to forecast but to warn. We don’t ever want to forecast a disaster; we want to take actions that will prevent the disaster from happening.”
― Robert J. Shiller, Narrative Economics: How Stories Go Viral and Drive Major Economic Events

“Koopmans pointed out, traditional economic approaches fail to examine the role of public beliefs in major economic events—that is, narrative. By incorporating an understanding of popular narratives into their explanations of economic events, economists will become more sensitive to such influences when they forecast the future.”
― Robert J. Shiller, Narrative Economics: How Stories Go Viral and Drive Major Economic Events

“two elements: (1) the word-of-mouth contagion of ideas in the form of stories and (2) the efforts that people make to generate new contagious stories or to make stories more contagious.”
― Robert J. Shiller, Narrative Economics: How Stories Go Viral and Drive Major Economic Events

“Social psychologist Leon Festinger described a “social comparison process”10 as a human universal. People everywhere compare themselves with others of similar social rank, paying much less attention to those who are either far above them or far below them on the social ladder.”
― Robert J. Shiller, Narrative Economics: How Stories Go Viral and Drive Major Economic Events

“Apple bought Siri from its creator, SRI (Stanford Research Institute) International, which had developed it with government funding from the US Defense Advanced Research Projects Agency (DARPA) between 2003 and 2008.”
― Robert J. Shiller, Narrative Economics: How Stories Go Viral and Drive Major Economic Events