How narratives influence economics : The Indicator from Planet Money The great toilet paper shortage of 2020 wasn't caused by the virus or by a disruption to manufacturing. It was caused by a story: one that we told ourselves. On the Indicator: how stories can affect the economy.

What's The Story? Narratives And The Economy

What's The Story? Narratives And The Economy

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Sign seen on an empty shelf in a grocery store as stores begin limiting the amount of items people can purchase as panic buying and hoarding of food and sanitary items continues due to fear of the novel coronavirus (COVID-19) across the country on March 21, 2020 in Toronto, Ontario, Canada.  (Photo by Creative Touch Imaging Ltd./NurPhoto via Getty Images)
NurPhoto/NurPhoto via Getty Images

Remember the great toilet paper, flour and egg shortages that we saw at the beginning of the pandemic?

Those weren't caused by problems in manufacturing: there was plenty of everything to go around. The shortages were caused by the story that we told ourselves, and our neighbors, and which traveled faster than the coronavirus itself.

In his book, Narrative Economics: How Stories Go Viral And Drive Major Economic Events, Nobel Laureate Robert Shiller talks about how narratives--stories that inspire emotion in consumers and influence their actions--should play a bigger role in predicting macroeconomic outcomes.

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