Animal spirits: how human psychology drives the economy, and why it matters for global capitalism / George A. Akerlof and Robert J. Shiller. John Maynard Keynes coined the term “animal spirits” to refer to emotional mindsets. Akerlof’s and Shiller’s distinguished reputations command attention, and. Summary of “Animal Spirits” — Akerlof and Shiller. Every major economic crisis represents an occasion to review the economic theories that purport to explain it, .

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We need to make precise models that give the right answer. Given all this, it does make it hard not to think that the system is rigged. The authors appear to be writing for an extreme skeptic, who, even after witnessing the dynamics involved in the housing meltdown and credit crunch, remain unconvinced of these precepts.

I don’t know much about economy, but i am passionate for psychology The question I found myself asking was: Not because of some underhanded desire to allow government to intrude in our lives, but because Keynes believed in taking account of the qualitative and intangible aspects of human behavior.

There have been several posts on different boards about this book taking a “liberal” wpirits. The book doesn’t explore the solution space much- my first thought is that an progressive proportion of wages should be in the flexible form of stock options in the employers The money illusion section was very good, none of the other economics books I’ve read have given it as much as attention as it gets here.

They talk about issues at the level of individual firms and consumers.

It’s easy to show flaws in the current models—but do you have a better one? It just makes us feel better. That is why this is only the dawn. Sometimes things happen randomly. For more own part, I imagine that this is only true if some other nation is willing to spend the money to purchase the products generated by this economy namely, the U. This feeds into one of the other animal spirit ideas — that is, that we need to trust the system, that there will be no corruption undermining the system while we are making investments in that system.


The right next step is not to decry it, but to rigorously investigate what happens when you relax shilller of the assumptions. The other part of this book that I really liked was the discussion of animxl cultural values of spending and saving in the United States as opposed to East Asia.

Chapter 5 is about the importance of stories in determining behaviour. Morrese rated it liked it.

I’m also still not quite sure what’s to be done to keep our “animal spirits” in check. Department of Defense, my experience would suggest quite the contrary.

If you’re interested in Economics as a science, ignore them. Economists will see it as a kind of manifesto.

Animal Spirits (book) – Wikipedia

Two Nobel Prize-winning economists, George Akerlof and Robert Schiller, use their version of Keynes’s theory of “animal spirits” to explain akedlof financial crises and how economies grow.

Chapter 12 discusses why real estate markets go through cycles, with periods of often rapid price increase interspaced by falls. I find neoclassical microeconomics mind-numbingly boring; cognitive microeconomics is more interesting—and more valid—but it still lacks the glamor of large-scale impact that macroeconomics promises.

In one instance I failed to note the pagethey seem to go along with the story that contacting out of government services leads to cost savings. Chapter 13 suggests that animal spirits can be used to explain the persistence of poverty among ethnic siprits, describing how working class minorities have different stories about how the world works and their place in it, compared to working class white people.

Animal Spirits: How Human Psychology Drives the Economy, and Why It Matters for Global Capitalism

First published inthese two Nobel Prize winning economists discuss here in great detail the role of human psychology in market syiller. Now, if only I could figure out how to time it perfectly … Ultimately, it was a crisis of confidence that caused the entire banking system to teeter on the brink in the fall of Here the authors discuss eight important questions about the economy, which they assert can only be satisfactorily answered by a theory that takes animal spirits into account.


Actually that would count as cognitive macroeconomics I think; it’s just not in particular what I had in mind. Just a moment while we shil,er you in to your Goodreads account.

Some have noted the lack of ‘solutions’ presented here, apart from government regulation and intervention, but I must ask — is there even a real chance of changing human nature? Nov 25, Brian Jones rated it liked it Shelves: You need to have an interest in macroeconomics to enjoy this book.

Instead of a penetrating analysis which yields up new findings, the reader is left with conclusions that are obvious to anyone familiar with the way economic decisions are made in the real world. Robert Shiller and George Akerlof are Nobel laureates and Keynsians who believe that government has an active role to play in macroeconomic management.

Thanks for telling us about the problem. Its 14 chapters are split into two parts. I think it will age rather well as both a narrative of the financial crisis and as a sort of manifesto of what the “New Keynesian” approach to macroeconomics is all about, but it’s not as rigorous as I’d expected. A quick look back at and what has happened since shows that our current system runs afoul of both of those precepts.