Many people think of the economy as following a set of fairly scientific principles.
We buy more if things are cheap. We buy less if they're expensive. Companies hire more people if it looks like the economy is growing. They cut back if it looks like things are going to tank. Or say you're in charge of the Federal Reserve. Economic indicators help decide whether to raise or lower interest rates.
All of this seems very rational, very mathematical.
But Nobel Prize winner and economist Robert Shiller suggests that this kind of thinking might be too narrow.
This week on Hidden Brain, we talk with Shiller about the role stories play in our economic lives — not just the purchases we make as individuals, but the fate of entire economic systems.
Narrative Economics: How Stories Go Viral and Drive Major Economic Events by Robert J. Shiller
Tulipmania by Anne Goldgar
The Truth About Tulip Mania, by Lizzy McNeill and Sachin Croker, BBC, 2018
Laffer Curve Napkin at the National Museum of American History