Review Animal Spirits: How Human Psychology Drives the Economy, and Why It Matters for Global Capitalism
by GEORGE A. AKERLOF, ROBERT J. SHILLER
Great financial decline, such as the haunting global financial crisis back in 2008, remained to be the clearest indication that psychological forces do more harm than good to the wealth of nations. From wrongly-perceived practices in housing prices up to over-the-top confidence in financial markets, the so-called “animal spirits” run financial operations across different zones. Animal Spirits were written by two popular economists, posing intriguing financial questions and challenging the cognitive performances that oftentimes lead to failure in the system. This does not only provide an argument, but it also provides viable solutions aimed at repairing the malfunctioning economy.
Akerlof and Shiller drew inspiration from the concept of the animal spirit, a theory first introduced by John Maynard Keynes referring to the indolence that triggered the Great Depression and the indefinite cognition that comes with recuperation. Both authors revealed the crucial role of active governance in economic policymaking. Similar to the principles of Keynes, Akerlof, and Shiller acknowledge the important role of government in management, all while emphasizing that the natural flow of markets is not enough to provide financial stability. In hopes of adding insights to Keynesianism, they thoroughly discuss the persistent and disrupting implications of animal spirits in the economic landscape.
About the Authors
GEORGE A. AKERLOF — works as a Professor of Economics at the University of California and Berkeley University. He is the recipient of the 2001 Nobel Laureate in Economics. He co-authored the best-selling Animal Spirits together with Robert Shiller.
ROBERT SHILLER — is a renowned economist, academic-practitioner, and the best-selling co-author of Animal Spirits. He presently works as a Sterling Professor of Economics at Yale University.
Table of Contents
Preface to the Paperback Edition
PART ONE: ANIMAL SPIRITS
- Confidence and Its Multipliers
- Corruption and Bad Faith
- Money Illusion
PART TWO: EIGHT QUESTIONS AND THEIR ANSWERS
- Why Do Economies Fall Into Depression
- Why Do Central Bankers Have Power over the Economy (Insofar as They Do)?
- The Current Financial Crisis: What Is to be Done?
- Why Are There People Who Cannot Find a Job?
- Why Is There a Trade-off between Inflation and Unemployment in the Long Run?
- Why Is Saving for the Future So Arbitrary?
- Why Are Financial Prices and Corporate investment So Volatile?
- Why Do Real Estate Markets Go through Cycles?
- Why Is There Special Poverty among Minorities