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

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The idea that human behaviour can exert its own influence in the market is something that most traders would
buy into. . . . But in Narrative Economics, Shiller goes much broader and deeper, looking at how the stories we tell ourselves about the world drive our behaviour. . . . Economists, he argues, need to study this if they are to have any hope of doing a better job than they have in the past of predicting major events . . . and how people react to them.

“—Rana Faroohar, Financial Times

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Many economists argue that the US housing market and economy are still on solid foundations, but ignore
Shiller’s warnings at your peril. He rarely gets it wrong.

“—Tom Rees, The Telegraph

“Excellent . . . [this] snappy little book opens the path to a more comprehensive dialogue.”—Gillian Tett, Financial Times

“What’s surprising, perhaps, is that the gearheads in academic economics departments may finally be getting wind of all this. If they are, much of the credit must go to Robert J. Shiller, the Yale economist who won the Nobel Prize in his field in 2013. Shiller’s iconoclastic new book, Narrative Economics, ranges across disciplines to explore the role of narratives in explaining (as the subtitle has it) ‘how stories go viral and drive major economic events’.”—Daniel Akst, Strategy+Business

“The book is . . . good fun to read. It is full of amusing and apposite quotations, and interesting detail.”—Charles Goodhart, Central Banking Journal

“Shiller’s thorough discussion and many examples are certainly convincing as to the importance of narratives in individual economic decision-making and aggregate economic phenomena.”—Sonia Jaffe, Science

“Provocative . . . . Especially timely in the current social media-obsessed era, because narratives―both real and false―can spread globally with just a few swipes, affecting not just economic activity, but ultimately the balance of geopolitical power.”—Matt Schifrin, Forbes

“Any given scenario can allow for multiple narratives, both actual and potential. The question is why some prove more compelling than others. Shiller offers a range of answers, starting with the most obvious: a narrative is compelling when it is engaging and well expressed. Because his book is very well written, Shiller himself has satisfied this criterion.”—Barry Eichengreen, Project Syndicate

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Shiller has none of the salesman-like bluster of the stock pickers clamouring for attention on business
TV news . . . . As it is, he has only 40-odd years of being freakishly right about things. It will have to do.

“—David Morris, Financial News

“Highly readable, compelling.”—Steve Levine, Medium

“In this highly readable and entertaining book, Robert Shiller, extending the idea of contagious narratives with profound economic effects beyond stock-market and housing bubbles, ranges widely from old debates about the gold standard to the latest impacts of artificial intelligence. Narrative Economics contains a treasure of priceless quotations and examples and breaks new ground by tracing key words and phrases as they go viral and eventually fade away.”―Robert J. Gordon, New York Times bestselling author of The Rise and Fall of American Growth

“This is a fascinating and important book, written in an engaging style and packed with intriguing examples.”―Diane Coyle, University of Cambridge

“Ambitious and absorbing, Narrative Economics takes seriously the possibility that stories may have an economic life of their own, spreading through communities like epidemics, and it makes an extremely compelling case that studying such stories is important. The book is also a joy to read―lively, engaging, and accessible.”―Rajiv Sethi, Barnard College, Columbia University

“What causes the recurrent bubbles and busts in financial markets that create so much disruption in our lives? Economists have explored all sorts of possible causes, from subtle changes in monetary policy to the solar sunspot cycle. In this fascinating book, Robert Shiller argues that what really matters is a good story. Narrative economics, he argues, can explain what statistics miss, and shows how viral shifts in economic thinking resemble real epidemics.”―John Quiggin, author of Economics in Two Lessons