This address considers the epidemiology of narratives relevant to economic fluctuations. The human brain has always been highly tuned towards narratives, whether factual or not, to justify ongoing actions, even such basic actions as spending and investing. Stories motivate and connect activities to deeply felt values and needs. Narratives “go viral” and spread far, even worldwide, with economic impact. The 1920-21 Depression, the Great Depression of the 1930s, the so-called “Great Recession” of 2007-9 and the contentious political-economic situation of today, are considered as the results of the popular narratives of their respective times. Though these narratives are deeply human phenomena that are diﬀicult to study in a scientiﬁc manner, quantitative analysis may help us gain a better understanding of these epidemics in the future.
Shiller, Robert J., "Narrative Economics" (2017). Cowles Foundation Discussion Papers. 2533.