Animal Spirits: How Human Psychology Drives the Economy, and Why It Matters for Global Capitalism

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  • Format: Paperback
  • Copyright: 2010-02-21
  • Publisher: Princeton Univ Pr

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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. In a new preface, they describe why our economic troubles may linger for some time unless we are prepared to take further, decisive action.

‘’This very book seems to be one of the must reads in the Obama administration.’’ - Andreas Ernst, JASSS

I’’deologists are likely to dismiss this volume. However, for other readers whether their perspectives are quantitative or qualitative Animal Spirits may fill a troubling gap in existing investigations of the causes of booms and busts. ‘’- Thomas H. Wilkins, Investment Professional

‘’Akerlof and Shiller's book is an interesting and thought provoking attempt to understand how underlying human psychology drives the economy. The questions they pose and the examples they provide should be read by any economist seeking to better understand the differences between what economics predict will occur, and how people actually behave as individuals and within larger groups. ‘’- Dmitri Leybman, Midway Review

‘’Animal Spirits, which attempts to leverage the insights of behavioral economics to reanimate the vision of John Maynard Keynes, is perfectly timed for the present moment. ‘’- Nick Schulz, Wilson Quarterly

‘’Animal Spirits is exceptional in showing how economics can be accessible and relevant in dealing with this awesome challenge. ‘’- Irish Times

‘’George Akerlof and Robert Shiller have offered an attractive road map for a macroeconomics that might be inspired by the recent financial crisis. ‘’- Romar Correa, Economic & Political Weekly

‘’I believe this book to be best suited for those individuals who come from different fields but have a keen interest in economics and finance. ‘’- Kristina Vasileva, Journal of General Management

Author Biography

George A. Akerlof is the Daniel E. Koshland Sr. Distinguished Professor of Economics at the University of California, Berkeley. He was awarded the 2001 Nobel Prize in economics. Robert J. Shiller is the best-selling author of "Irrational Exuberance" and "The Subprime Solution" (both Princeton). He is the Arthur M. Okun Professor of Economics at Yale University.

Table of Contents

Preface to the Paperback Editionp. vii
Prefacep. xxi
Acknowledgmentsp. xxvii
Introductionp. 1
Animal Spirits
Confidence and Its Multipliersp. 2
Fairnessp. 19
Corruption and Bad Faithp. 26
Money Illusionp. 41
Storiesp. 51
Eight Questions and Their Answers
Why Do Economies Fall into Depression?p. 59
Why Do Central Bankers Have Power over the Economy (Insofar as They Do)?p. 74
Postscript to Chapter seven The Current Financial Crisis: What Is to Be Done?p. 86
Why Are There People Who Cannot Find a Job?p. 97
Why Is There a Trade-off between Inflation and Unemployment in the Long Run?p. 107
Why Is Saving for the Future So Arbitrary?p. 116
Why Are Financial Prices and Corporate Investments So Volatile?p. 131
Why Do Real Estate Markets Go through Cycles?p. 149
Why Is There Special Poverty among Minorities?p. 157
Conclusionp. 167
Notesp. 177
Referencesp. 199
Indexp. 219
Table of Contents provided by Ingram. All Rights Reserved.

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Customer Reviews

well worth a read June 12, 2011
I think this textbook is best suited to an audience that is reasonably well-aware of economic ideas about markets and the macroeconomy. This of course includes professional economists as well as many policy wonks interested in macroeconomic policy. Highly informative and at times entertaining, the authors do a great job in explaining complex economic theories in very simple language.
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Animal Spirits: How Human Psychology Drives the Economy, and Why It Matters for Global Capitalism: 4 out of 5 stars based on 1 user reviews.

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