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A review by ranahabib
Narrative Economics: How Stories Go Viral and Drive Major Economic Events by Robert J. Shiller
4.0
Rating: 8/10
Duration: 7-8 days
Review:
In his book Narrative Economics, Shiller argues that narratives largely affect economic activities and should therefore be considered in economic theory and forecasts.
Likes:
1. Intertwining disciplines: At the beginning of the book, Shiller draws the connection between narrative economics and Epidemiology, which is the study of the occurrence and contagion of diseases. Similar to diseases, narratives are contagious, spreading fast and/or slowly over a short and/or long period of time. Also, similar to diseases, new narratives can emerge, and old ones can reoccur. This connection made it easier to understand narrative economics.
2. Incorporating Behavioural Economics: I'm a major fan of behavioral economics, which studies the link between psychology and economics, and how consumers behave when making decisions. Like narrative economics, behavioral economics challenges traditional economic theory, arguing that humans are largely irrational when making decisions. Factors like environment, society, culture, and emotions all play a large role in one's economic decisions, potentially affecting the economy as a whole. I really enjoyed reading the bits about behavioral econ and its relation to narrative economics.
3. Encourages out-of-the-box-thinking: Overall, Narrative Economics offers a unique approach to economic forecasting, which I really value. Shiller encourages readers to not be rigid when analyzing the economy or making important economic decisions but instead, focus on the whole picture. He does this by introducing the concept of narrative constellations and narrative confluence. Narrative constellations are multiple similar narratives that work together to produce the same economic outcome. On the other hand, a narrative confluence is unseemingly related narratives working together to produce the same economic outcome.
Dislikes:
1. Writing: Shiller is a boring writer and a poor explainer, which is such a shame since his ideas are unique and interesting. Putting his ideas into my own words helped me understand his ideas and concepts better, otherwise, I would've probably remained confused.
2. Part 3: The book was going well up until Part 3, which explores long-lasting narratives (ex. fear of technology taking over jobs).
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Things to note:
> The book is divided into four parts:
1. Basic concepts (explores bitcoin narrative and Laffer curve narrative, super interesting)
2. Foundations of economic narratives
3. 9 perennial narratives (lasting narratives, ex. advanced technology will take our jobs)
4. Future of narrative economics
> In his book Narrative Economics, Shiller examines how narratives affect economic events, focusing on two elements (pg. xvii):
1. Word-of-mouth contagion in the form of stories
and 2. the efforts made by people to either create new contagious stories or make current stories more contagious
> Quote: "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."
> Quote: "Traditional economic approaches fail to examine the role of public beliefs in major economic events"
Duration: 7-8 days
Review:
In his book Narrative Economics, Shiller argues that narratives largely affect economic activities and should therefore be considered in economic theory and forecasts.
Likes:
1. Intertwining disciplines: At the beginning of the book, Shiller draws the connection between narrative economics and Epidemiology, which is the study of the occurrence and contagion of diseases. Similar to diseases, narratives are contagious, spreading fast and/or slowly over a short and/or long period of time. Also, similar to diseases, new narratives can emerge, and old ones can reoccur. This connection made it easier to understand narrative economics.
2. Incorporating Behavioural Economics: I'm a major fan of behavioral economics, which studies the link between psychology and economics, and how consumers behave when making decisions. Like narrative economics, behavioral economics challenges traditional economic theory, arguing that humans are largely irrational when making decisions. Factors like environment, society, culture, and emotions all play a large role in one's economic decisions, potentially affecting the economy as a whole. I really enjoyed reading the bits about behavioral econ and its relation to narrative economics.
3. Encourages out-of-the-box-thinking: Overall, Narrative Economics offers a unique approach to economic forecasting, which I really value. Shiller encourages readers to not be rigid when analyzing the economy or making important economic decisions but instead, focus on the whole picture. He does this by introducing the concept of narrative constellations and narrative confluence. Narrative constellations are multiple similar narratives that work together to produce the same economic outcome. On the other hand, a narrative confluence is unseemingly related narratives working together to produce the same economic outcome.
Dislikes:
1. Writing: Shiller is a boring writer and a poor explainer, which is such a shame since his ideas are unique and interesting. Putting his ideas into my own words helped me understand his ideas and concepts better, otherwise, I would've probably remained confused.
2. Part 3: The book was going well up until Part 3, which explores long-lasting narratives (ex. fear of technology taking over jobs).
------------------------------------------------------------------------
Things to note:
> The book is divided into four parts:
1. Basic concepts (explores bitcoin narrative and Laffer curve narrative, super interesting)
2. Foundations of economic narratives
3. 9 perennial narratives (lasting narratives, ex. advanced technology will take our jobs)
4. Future of narrative economics
> In his book Narrative Economics, Shiller examines how narratives affect economic events, focusing on two elements (pg. xvii):
1. Word-of-mouth contagion in the form of stories
and 2. the efforts made by people to either create new contagious stories or make current stories more contagious
> Quote: "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."
> Quote: "Traditional economic approaches fail to examine the role of public beliefs in major economic events"