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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Humans are not rational animals.

Akerlof and Shiller remind me of George Soros, who, similarly, exults in destroying a straw-man which only the most extreme worshiper spifits untrammeled free-market capitalism approximates. Hardcoverpages. Given all this, it does make it hard not to think that the system is rigged.

Animal Spirits (book) – Wikipedia

They also failed to follow their “animal spirits” idea to its logical conclusion, that the unpredictable nature of human behavior severely limits the utility of economics as a science.

Dpirits, fairness, corruption, money illusion, and stories. Nov 13, Nishanth Pathy rated it really liked it.

Why do people make the same mistake over and over? But he makes no predictive propositions; there’s nothing quantitative. Here the authors discuss eight important questions about the economy, which they assert can only be satisfactorily answered by a theory that takes animal spirits into account. Actually that would count as cognitive macroeconomics I think; it’s just not in particular what I had in mind.

Akerlof and Schiller take to task ‘mainstream’ classical economics in certain areas, but in a very fair way, acknowledging where ‘rational’ theories seem to hold, while pointing out those ever-important situations where they fail.


Cognitive scientists have basically established that human short-term memory comes in two basic data formats, image and audio. Behavioral and Experimental economics appears to be the next evolution sbiller Economic theory.

Although I generally spiriits Shillers’ and Akerofs’ views, this book is highly anecdotical and full of sophisms. Reality is unrealistic, and sadly, the good guys don’t always win.

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

Since at least most people have considered real estate a great and safe investment. Humans are emotio Humans are not rational animals. Money illusion, feedback loops, subjective societal concerns over ‘fairness’, and ‘stories’ are all part of the “Animal Spirits” hats off to Keynes investigated here. They talk about issues at the level of individual firms and consumers.


There is also a more serious undercurrent in this book, about how the “rational” economists ignore how we really feel. Much work has been done in behavioral economics in recent years and this study gives excellent synopses. The maximum likelihood is basically just what you actually found. Akerlof examines five important psychological elements that economists should take into account: Neoclassical economics succeeds as a science in one sense: But Akerlof merely identifies problems with current theory, and then assumes akerloof the solution is better management by the government.

Akerlof and Shiller both prominent Nobel-laureate economists take the strongest aim at mainstream economics’s core assumption that individuals act as “expected uti Animal Spirits is an well-written treatise accessible to both economists and non-economists alike. Want to Read saving…. There are many events that occur which fits no model of economic theory and makes the argument that no government intervention is a very poor choice of regulation in where the theory does not apply.


Aug 13, Joel rated it really liked it Shelves: Almost ten years after this book was first ahiller it’s depressing that the insights epirits here have gained little traction spieits businessmen, politicians and regulators who still believe that unfettered markets are best and that government is virtually always part of the problem, not part of the solution.

In this book Akerlof and Shiller convincingly introduce psychology to macroeconomics to bridge this gap. Unfortunately, I think they unconsciously skerlof in to other assumptions that should be questioned. Insofar as sjiller Spirits” takes the reader on a guided tour through some of the financial cataclysms of the 20th century, it is useful as a historical narrative.

It argues that any theory that presumes an economy moves due to the rational responses of self-interested actors in response to reasonable amounts of valid information is working under a false premise.

In cases such as andthere were identifiable, proximate causes for people’s actions which we can turn to without invoking “animal spirits”. Animal Spirits carries its ambition lightly—but is ambitious nonetheless.

George Akerlof and Robert Shiller. May 22, Trevor rated it really liked it Shelves: The book calls for a revamping of conventional economics to factor these animal spirits into conventional economic thinking.