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Loading... Animal Spirits: How Human Psychology Drives the Economy, and Why It…by George A. AkerlofLibraryThing recommendationsMember recommendationsLoading...
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will love Sign up for LibraryThing to find out whether you'll like this book.  DavidGoldsteen | Aug 20, 2009 |  Behavioral economics is a new field in economics that acknowledges that homo economicus— the entirely-rational actors featured in classical economic theory— are not the same beings as homo sapiens. John Maynard Keynes described this influence as “animal spirits”. Akerlof and Shiller identify five factors contributing to these animal spirits: confidence, fairness, corruption and bad faith, money illusion, and stories. They identify how these affect individual behaviors and how, in aggregate, these behaviors produce macroeconomic phenomena. The authors assert that this is not a fundamental flaw with capitalism, but merely a basis for devising effective market regulations. They do not provide explicit policy recommendations; the book merely provides a model with explanatory power that can be used as a basis for further discussion. I’m looking forward to further developments. (  ) slothman | May 12, 2009 | 
 In Animal Spirits, two Keynesian economists — George Akerlof, a Nobel-prizewinning economist at the University of California, Berkeley, and Robert Shiller, an economist at Yale University — use findings from psychology to amplify one of economist John Maynard Keynes's theories. In his signature 1936 work, The General Theory of Employment, Interest and Money, Keynes explained that economies should fluctuate because people behave in unpredictable ways — under the influence of what he called "animal spirits".
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Animal Spirits: How Human Psychology Drives the Economy, and Why It Matters for Global Capitalism |
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The global financial crisis has made it painfully clear that powerful psychological forces are imperiling the wealth of nations today. From blind faith in ever-rising housing prices to plummeting confidence in capital markets, "animal spirits" are driving financial events worldwide. In this book, acclaimed economists George Akerlof and Robert Shiller challenge the economic wisdom that got us into this mess, and put forward a bold new vision that will transform economics and restore prosperity.
Akerlof and Shiller reassert the necessity of an active government role in economic policymaking by recovering the idea of animal spirits, a term John Maynard Keynes used to describe the gloom and despondence that led to the Great Depression and the changing psychology that accompanied recovery. Like Keynes, Akerlof and Shiller know that managing these animal spirits requires the steady hand of government--simply allowing markets to work won't do it. 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 offers a road map for reversing the financial misfortunes besetting us today. Read it and learn how leaders can channel animal spirits--the powerful forces of human psychology that are afoot in the world economy today.
(retrieved from Amazon Fri, 24 Apr 2009 07:57:55 -0400)
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With that in mind, I was excited to read "Animal Spirits" by Akerlof and Shiller. I'd recently read Shiller on the housing bust, and though I think he is too optimistic about using financial markets to correct for price bubbles, I think he has a good perspective.
"Animal Spirits" is more a manifesto than a fully thought-out economic model. It points the way to a more mature way of modeling behavior, taking into account feedback loops due to confidence, etc. It's only half a model at this point, though: it provides a reasonable framework for interpreting events in the past, but I'm not sure it's ready to make predictions about the future. This is the true test of a model.
The prose is good, and the economics are clear. Akerlof and Shiller are clearly writing for the average reader, who'd rather not see an equation in the middle of a casual read. They have an annoying tendency to refer to themselves individually in parenthesis, but otherwise, a nice prose style. (