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, .
|Published (Last):||10 May 2015|
|PDF File Size:||20.29 Mb|
|ePub File Size:||18.17 Mb|
|Price:||Free* [*Free Regsitration Required]|
The key point of the book is that psychological biases and sociological norms add up and have real economic effect. Shiller 9 is about why there is a trade off between unemployment and inflation.
Note that despite the playful illustrations on the cover this is not a light pop-economics book.
But which intelligent observers continue to need persuading? The maximum likelihood is basically just what you actually found. If we want to live by Keynes’s “the world is ruled by little else”, it is in xnimal that we will do so. So we’re not quite there yet.
Economists assume that individuals make choices based on their rational self interest. Of course they do.
With money, humans are hardly rational beings, even less than usual. The book was reasonably interesting if you like that kind of thing.
Humans are emotio Humans are not rational animals. You need to have an interest in macroeconomics to enjoy this book. In other words, the straw-man is a stand-in for Milton Friedman, or possibly Xnimal Greenspan. Oct 05, Tom rated it it was ok. So what we were left with was a model of rational economic decision-making, where every consumer and businessperson carefully and logically analyzed the real value of assets, was akerlf of figuring out how to discount future cash flows and account for both inflation and the cost of capital, and never ever succumbed to wild manias or profound despair.
Despite my natural proclivity to the authors’ point of view I felt their arguments were poorly made. Money illusion, feedback loops, subjective societal concerns over ‘fairness’, and ‘stories’ are all part of the “Animal Spirits” hats off to Keynes investigated here. Rather, it exposes the shortcomings of classical economics and urges policy makers to consider the world we live in rather than the world their false assumptions describe.
Fast forward to the ani,al of The question I found myself asking was: This book doesn’t contain any prescriptions for regulatory reform and policy responses to the Great Recession. 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.
That is why this is only the dawn. Cognitive economics isn’t quite at that point yet; we have the potential to make predictions that are correct, which is of course the goal; but right now we aren’t making a whole lot of predictions at all, and the ones we are making aren’t very precise.
The preface goes on to describe how Keynes’ ideas suggest the economy will function s;irits with a moderately high level of government intervention, which they compare to a happy home where children thrive with parents that are neither too authoritarian as in a Marxist economy nor too permissive as in a neoliberal economy.
A review of Animal Spirits by George A.
zhiller The primary theme of the book attacks the basic anima premise that people primarily make rationale decisions in their economic interests, instead of often acting irrationally or in response to perceptions of fairness, corruption, etc. Have we not seen overwhelming evidence in the past three years that unfettered capitalism can destroy the very basis of wealth accumulation, and that there is a proper and appropriate role for government regulation spirts minimize the swings in consumer confidence?
With ehiller in hand, Akerlof and Shiller present a compelling set of explanations for macroeconomic questions like “Why do economies fall into depression? Akerlof and Robert J. That’s basically the central point of this relatively short book on behavioral economics. House values increase by 0. But this thought experiment fails to take into account the extent to which people are also guided by noneconomic motivations. In rebuilding the case for a more robust, behaviorally informed Keynesianism, they detail the most pervasive effects of animal spirits in contemporary economic life–such as confidence, fear, bad faith, corruption, a concern for fairness, and the stories we tell ourselves about our economic fortunes–and show how Reaganomics, Thatcherism, and the rational expectations revolution failed to account for them.
Animal Spirits (book) – Wikipedia
If you want to know why the economy works the way it does – xpirits is the book for you. The authors look at the roots of the recessions and aketlof of the previous years or so, and identify the factors that they think need to be brought into a deeper understanding of economics to explain the current crisis. Open Preview See a Problem? If ever there were a time for a sobering analysis of how macroeconomic events actually occur, that time was surely now.
These include, but are not limited to, Confidence, the myth of fairness, the illusion of money, corruption, and ‘Stories’ psirits past explanations of behavior. All of this was pretty much commonsense which even as a non-financial person, I knew several years ago even before the housing bubble burst.
Animal Spirits: How Human Psychology Drives the Economy, and Why It Matters for Global Capitalism
Nov 19, Hadrian rated it really liked it Shelves: Department of Defense, my experience would suggest quite the contrary. The book asserts that a variety spiritss otherwise puzzling questions can be answered once one allows for the effect that emotional drivesor “animal spirits,” have on economic factors.
I expected more from the authors, given their sterling credentials.
Aug 14, Andrej Badilla Solano rated it liked it. Often the cause is unavailable to us. Hardcoverpages.