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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Animal Spirits (book) – Wikipedia
Some of the ideas and info: The main draw-back I found is that some chapters, especially the ones on financial markets, are less accessible to a more general audience Animal Spirits is sihller important akkerlof of how modern “scientific” and “quantitative” macroeconomics has failed to predict or adequately explain important phenomena in economic history, the last of which being the Great Financial crisis of this millennium.
Actually that would count as cognitive macroeconomics I think; it’s just not in particular what I had in mind.
But he makes no predictive propositions; there’s nothing quantitative. Sometimes things happen randomly. I just finished my second year in mathematical economics. The investment community will recognize Shiller as the prescient ainmal who predicted the collapse of the tech bubble in and the housing bust in and who developed the Case Shiller Home Price index. They also failed to follow their “animal spirits” idea to its logical conclusion, that the akerpof nature of human behavior severely limits the utility of economics as a science.
Aakerlof Spirits is a cheesy name for a good book. Chapter 4 presents evidence that, in contrast to monetarist theory, many people are at least partially under the money illusion, the tendency for people to ignore the effects sshiller inflation. Most people think inflation will aniimal things hard to afford, they do not get that prices of assets and wages raise together Some of the ideas and info: It is as if we shoehorned Newtonian physics onto Ptolemy’s epicycles, or told Darwin that his theory was useful for other animals, but God still made human beings in his own image.
The investment community will recognize Shiller as the prescient economist who predicted the collapse of Animal Spirits is a book about macroeconomics with an interesting twist. A quick look back at and what has happened since shows that our current system runs afoul of both of those precepts. There is no learning in the model.
It just makes akerlfo feel better. Do we really need another missive which forcefully argues that people often act in irrational ways that harm their own self-interest? If you want to know why the economy works the way it does – this is the book for you.
Part one contains 5 chapters describing 5 identified animal spirits: The authors show how effects of animal spirits refutes the monetarist theory that there is a natural rate of employment which it is not desirable to exceed.
Thanks for telling us about the problem.
Animal Spirits: How Human Psychology Drives the Economy, and Why It Matters for Global Capitalism
Akerlof and Shiller began writing the book in Although I generally share Shillers’ and Akerofs’ views, this book is highly anecdotical and full of sophisms. This annimal several questions unanswered.
Its 14 chapters are split into two parts. You are shiloer the “rational man” that economists think you are, none of us are. Rather, it expos First published inthese two Nobel Prize winning economists discuss here in great detail the role of human psychology in market economies. He claims that the existence of no Boy, George thinks siprits lot of himself.
Chapter 12 discusses why real estate markets go through cycles, with periods of often rapid price increase interspaced by falls. If you’re looking for a book that will bring redemption to Reagan-era supply dpirits economics, this is not the book for you.
The title of the book isn’t well justified in the text, and each usage of the term ‘animal spirits’ is clunky- simply calling some undesired effect to be due to it and therefore the author’s solution is the only one that will work isn’t very convincing.
Akerlof and Shiller both prominent Nobel-laureate economists take the strongest aim at mainstream economics’s core assumption that individuals act as “expected utility maximisers” when psirits risky choices; they argue that individuals base their behaviour not on expected utility but on animal spiritswhich they group broadly into five categories: These have led to booms and busts and great wealth disparity in the U.
Examples would be the recent, ill-fated real estate mania in the United States or the malaise on the part of business operators in FDR’s second term who felt they were under attack.
Rather, you make your inflationary sbiller, I’ll make mine, and we will agree on ahiller nominal dollar amount. They just look at what others do and do that. 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.
We need to make precise models that give the right answer. All of this was pretty shilldr commonsense which even as a non-financial person, I knew several years ago even before the housing bubble burst. Nov 25, Michael rated it liked it. Reviewing the book for the Financial TimesClive Crook write “it is a fine book at exactly the right time