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Macroeconomics Search Macroeconomics MacroeconomicsAnimal Spirits: How Human Psychology Drives the Economy, and Why It Matters for Global Capitalism
Princeton University Press Search Princeton University Press by George A. Akerlof Robert J. Shiller Search George A. Akerlof Robert J. Shiller
Customer Reviews:
Interesting view that questions traditional thinking
The authors of this book argue that traditional philosophies of economics are flawed because they assume that people rationally pursue their economic interests, which results in perfect and stable free market capitalism. The traditional views fail to address that people are also guided by noneconomic motivations and they might be irrational and misinformed. In other words, they ignore the animal spirits.
The authors believe that our animal spirits affect economic decisions and help us answer questions such as why economies fall into depression, why people cannot find jobs, why real estate markets go through cycles, and why poverty persists for generations among disadvantaged minorities. I found this book interesting to read.
- Mariusz Skonieczny, author of Why Are We So Clueless about the Stock Market? Learn how to invest your money, how to pick stocks, and how to make money in the stock market
Self-satisfied Drivel 
I laboured my way to the end of this book and regret the waste of time. The principal thrust is that all other economists are stupid for failing to realise that not everything is measurable or rational. There we are - saved you from reading it, and saved you from the self satisfaction oozing from every page.
(I reckon I must be one of the few writing a review that hasn't been asked to by the authors or publishers - can't understand the positive response.)
convincing, common sense view of the economy 
Animal spirit's premise, the economy is driven by fallible human beings rather than perfectly rational beings, doesn't seem very revolutionary. It does seem likely; who - or rather what - else participates in the economy, after all?
There are a few predictions that can be tested, so there is a scientific base to the arguments.
Animal Spirits is an enjoyable, quick read, and a good introduction to behavioral economics with almost no equations.
economists got suckered too 
Judging from the avalanche of books with the implied sub-title "What went wrong and how to fix it" economists too need to make a fast buck to recover something from the devastation of their pension funds.
The authors (one a Nobel, no less) identify the cause of the crash in "animal spirits", a throwaway remark by J M Keynes who proposed that investment decisions were much less rational and calculating than the deciders would have you believe.
Of course, Keynes, Akerlof and Shiller are right. Animal spirits do animate us. How else to explain the wild gyrations of asset markets and our total surprise to find that a trend is jn fact (as I think Keynes remarked) "a thing that goes on until it stops" but NOT something that goes on forever.
So the authors make a list, and explain what went wrong. This list is basically a round-up of behavioural economics, that just-so story for brainy people with regression analysis tools.
At least Akerlof and Shiller have the grace to acknowledge that they didn't see the crash coming. So what is their response to the "how to fix it" question?
Akerlof seems fairly cautious; more regulation. Shiller seems to favour a more full-blown socialism. It's fairly easy to identify which author wrote which bit, as the writing styles are uneven, with Akerlof more obscure but more interesting and Shiller shriller and clearer.
This a shallow and trashy bit of crash-exploitation econom-porn. The authors seem quite genial coves, so I don't entirely begrudge them the time and money I wasted. Hint if you're in a bookshop: the conclusion is adequate to sum all the ideas in the book and can be read while browsing.
OK, I'll try to be fair. There is one idea that I hadn't come across before. "Wage efficiency theory" posits that employment contracts aren't like transactions, they're more like relationships, because the contract is struck at the beginning of a time period. The result is that employees are actually paid a bit more than the going rate (and by implication, their worth).
Typically, this fascinating idea remains undeveloped, apart from its power to explain persistent unemployment. I like the idea that not only was Marx wrong in practice, and wrong in theory (Labour theory of value) but didn't go far enough. The further implication, of course, is that if labour is overpaid, some other factor of production must be underpaid. Indeed, Gregory Clark, an obscure but interesting quantitative historical economist A Farewell to Alms: A Brief Economic History of the World (Princeton Economic History of the Western World)shows that return on capital has been declining for 800 years. And the further implication, of course, is that if the workers are overpaid, maybe they should be required to give a "bonus" periodically to the employer. Of course they don't, and the result is occasional bankruptcy with no redundancy provision and an underfunded pension scheme.
An antidote for the noughties?
For over seven decades, so-called Keynesians - and other economists - have been stripping the animal spirits out of the General Theory, and along the way the resulting economic thought has produced the environment that led to the crisis of the late noughties. The ideological pathway, however, traces back three decades to Thatcher and Reagan releasing market forces through government regimes which Akerlof and Shiller, in this antidote to laissez-faire, liken to indulgent parents allowing their kids to run amok.
That economics is going through something of a crisis itself is self-evident. Even the dismal science's house periodical, The Economist itself, ran a series of features to that effect in July 2009. Akerlof and Shiller attempt to redress the balance through the reintroduction of animal spirits via the relatively new school of behavioural economics, of which Akerlof is a leading exponent. They're looking for a "happy home" which allows some fun, but also draws some very clear demarcation lines between what is and isn't acceptable.
The account begins with a look at animal spirits and their gradual marginalisation in economic orthodoxy. They discuss the role of Confidence; how Fairness is often an afterthought; how Corruption and Bad Faith creep in and how, in this context, accountants are our white-hatted heroes (though we do pause for thought over the role of Arthur Andersen in Enron). They lament the fact that too often "economics" books are economics books only, to the exclusion of the other social sciences (for a different treatment of economics which shares this sentiment see also Douglass North's Understanding The Process Of Economic Change).
A poignant aside is their observation on the increasing popularity of poker at the expense of the more collaborative game of contract bridge. This is at least an appropriate metaphor for the nature of finance in the early 21st Century, even if it isn't an indicator.
Having laid the foundations in Part 1, Part 2 proceeds to analyse and explain a number of economic phenomena such as commodities market fluctuations, the low propensity of people to save in the US, and real estate cycles.
Throughout they don't waste opportunities to have a snipe at some of those whose economics have, in their view, landed us in the current mess. There is a heavy hint of criticism of the Chicago school in general, a particularly targeted pop at Long Term Credit Management and its leading lights, Nobel laureates Merton and Scholes, and they even manage a gentle swing at sacred cows such as Milton Friedman and Paul Samuelson.
They also create opportunities to propose solutions, often beginning with the premise that if there is one function Government needs to perform it is the keeping in check of animal spirits, not to mention cleaning up the mess when things go wrong without creating the conditions where moral hazard becomes a real threat. A key passage comes in Chapter 11, which includes the conclusion that "what allows capitalism to function is the regulations which assure" us that when we buy something we are "getting a product with some guarantees."
Chapter 13, which is possibly the one most deserving and in need of elaboration, tackles the issues of minorities, and particularly the predicament of American blacks born into an apparently inexorable cycle of Us and Them. Very bravely in my opinion, at least from an intellectual point of view, they use this chapter to defend the principle of affirmative action programmes, and also to attack the government philosophy which gives a black male in the US a 25% lifetime chance of at some time being incarcerated in prison.
With regard to the writing, the prose throughout is highly readable, and the editing is generally good, although on page 65, when discussing bankers' failure to appreciate the import of the overheating economy in the 1920s, they say, "Thus they did fully appreciate its dangers", where I think the word "not" has been lost.
Readers of Akerlof's more academic works will likely find this particular volume rather lightweight. That has to be to the good, however, given the need to popularise some of the notions espoused here. I won't pretend to be 100% in agreement with their entire thesis, but I'd certainly rather see politicians singing to this hymnsheet than to Friedman's.
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Book Review - Animal Spirits: How Human Psychology Drives the ...
I have read a lot of these types of books recently and this is the most accessible. http://www.amazon.com/Animal-Spirits-Psychology-Economy-Capitalism/dp/0691142335/ref=sr_1_1?ie=UTF8&s=books&qid=1258607946&sr=1-1.
http://timwadesthoughts.blogspot.com/2009/11/book-review-animal-spirits-how-human.html
Animal Spirits How Human Psychology Drives the Economy, and Why It ...
ISBN-10: 0691142335: ISBN-13: 9780691142333: Publisher: Princeton University Press. Improve data of this book. FAQ See all. How does the voting work? Find a comment helpful / unhelpful? Cast your vote. Only one vote from each person ...
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Animal Spirits: How Human Psychology Drives the Economy, and Why ...
Animal Spirits: How Human Psychology Drives the Economy, and Why it Matters for Global Capitalism: Amazon.de: George A. Akerlof, Robert J. Shiller: Englische Bücher.
http://www.amazon.de/Animal-Spirits-Psychology-Economy-Capitalism/dp/0691142335
behavioural economics: should policymakers care?
... relevance of behavioural economics to current policy are linked below. http://www.amazon.com/nudge-improving-decisions-health-happiness/dp/0300122233. http://www.amazon.com/animal-spirits-psychology-economy-capitalism/dp/0691142335.
http://www.irisheconomy.ie/index.php/2009/04/03/behavioural-economics-should-policymakers-care/
the power and value of greater human understanding
animal spirits - http://www.amazon.co.uk/animal-spirits-psychology-economy-capitalism/dp/0691142335/ref=sr_1_1?ie=utf8&s=books&qid=1245231735&sr=1-1 ...
http://www.mccann-erickson.co.uk/2009/07/the-power-and-value-of-greater-human-understanding.html
animal spirits
isbn: 9780691142333, 0691142335. year: 2009. subjects: economics, finance, capitalism, globalization, psychological aspects "the global financial crisis has made it painfully clear that powerful psychological forces are imperiling the ...
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animal spirits - interview with robert schiller discussing ...
buy the book here: http://www.amazon.com/animal-spirits-psychology-economy-capitalism/dp/0691142335. permalink | leave a comment »
http://imperfect.posterous.com/animal-spirits-interview-with-robert-schiller
animal spirits: how human psychology drives the economy, and why ...
animal spirits: how human psychology drives the economy, and why it matters for global capitalism by george a. akerlof, robert j. shillerpublisher: princeton university press 2009-02-18 | 264 pages | isbn: 0691142335 | pdf | 25 mb the ...
http://www.freshlap.com/2009/06/18/animal-spirits-how-human-psychology-drives-the-economy-and-why-it-matters-for-global-capitalism/
animal spirits: how human psychology drives the economy, and why ...
publisher: princeton university press 2009-02-18 | 264 pages | isbn: 0691142335 | pdf | 25 mb. the global financial crisis has made it painfully clear that powerful psychological forces are imperiling the wealth of nations today. ...
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Trading 8s » Why Some Economists Still Aren't Smiling <link rel ...
John Maynard Keynes would call that the result of <a href="http://www.amazon.com/Animal-Spirits-Psychology-Economy-Capitalism/dp/0691142335" onclick="javascript:pageTracker._trackPageview('/outbound/article/www.amazon.com');" ...
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