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. In a new preface, they describe why our economic troubles may linger for some time--unless we are prepared to take further, decisive action.
"Akerlof and Shiller are the first to try to rework economic theory for our times. The effort itself makes their book a milestone."--Louis Uchitelle, New York Times Book Review
"There is barely a page of Animal Spirits without a fascinating fact or insight."--John Lanchester, New Yorker
"Akerlof and Shiller succeed, too, in demonstrating that conventional macroeconomic analyses often fail because they omit not just readily observable facts like unemployment and institutions such as credit markets but also harder-to-document behavioral patterns that fall within the authors' notion of 'animal spirits.' Confidence plainly matters, and so does the absence of it. When the public mood swings from exuberance to anxiety, or even fear, the effect on asset prices as well as on economic activity outside the financial sector can be large."--Benjamin M. Friedman, New York Review of Books
"Two of the most creative and respected economic thinkers currently at work, George Akerlof and Robert Shiller, . . . [have written] a fine book at exactly the right time."--Clive Crook, Financial Times
"A truly innovative and bold work. . . . At a time when plummeting confidence is dragging down the market and the economy, the authors' focus on the psychological aspect of economics is incredibly important."--Michael Mandel, BusinessWeek
"Animal Spirits [is] . . . the new must-read in Obamaworld."--Michael Grunwald, Time
"[Animal Spirits] really applies to all the big areas where we need change."--Peter Orszag, Obama budget director (quoted from Time magazine article)
Table of Contents
Other Princeton books authored or coauthored by George A. Akerlof:
Other Princeton books authored or coauthored by Robert J. Shiller: