Over at The Washington Post, Heather Long calls our attention to Nobel Prize-winning economist Robert Shiller’s new book Narrative Economics: How Stories Go Viral & Drive Major Economic Events. Here is a taste of her piece:
As humanities majors slump to the lowest level in decades, calls are coming from surprising places for a revival. Some prominent economists are making the case for why it still makes a lot of sense to major (or at least take classes) in humanities alongside more technical fields.
Nobel Prize winner Robert Shiller’s new book “Narrative Economics” opens with him reminiscing about an enlightening history class he took as an undergraduate at the University of Michigan. He wrote that what he learned about the Great Depression was far more useful in understanding the period of economic and financial turmoil than anything he learned in his economic courses.
The whole premise of Shiller’s book is that stories matter. What people tell each other can have profound implications on markets — and the overall economy. Examples include the “get rich quick” stories about bitcoin or the “anyone can be a homeowner” stories that helped drive the housing bubble.
“Traditional economic approaches fail to examine the role of public beliefs in major economic events — that is, narrative,’ Shiller wrote. “Economists can best advance their science by developing and incorporating into it the art of narrative economics.”
Shiller, who is famous for predicting the dot-com crash and coming up with the Case-Shiller Home Price Index, is spending a lot of time looking at old newspaper clippings to understand what stories and terms went viral and how they influenced people to buy things — or stop buying things.
When asked if he’s essentially arguing for more English and history majors, Shiller said, “I think so,” adding: “Compartmentalization of intellectual life is bad.”