Akerlof and Shiller reassert the necessity of an active government role in economic policymaking by recovering the idea of animal spirits, a term John Maynard Keynes used to describe the gloom and despondence that led to the Great Depression and the changing psychology that accompanied recovery. Like Keynes, Akerlof and Shiller know that managing these animal spirits requires the steady hand of government--simply allowing markets to work won't do it. In rebuilding the case for a more robust, behaviorally informed Keynesianism, they detail the most pervasive effects of animal spirits in contemporary economic life--such as confidence, fear, bad faith, corruption, a concern for fairness, and the stories we tell ourselves about our economic fortunes--and show how Reaganomics, Thatcherism, and the rational expectations revolution failed to account for them.
"Animal Spirits" offers a road map for reversing the financial misfortunes besetting us today. Read it and learn how leaders can channel animal spirits--the powerful forces of human psychology that are afoot in the world economy today.
Limited preview - 2009 - 230 pages - Business & Economics
As a practicing economist I found this to be one of the best books debunking the "rational actor" based quant models around.
A downturn in imaginative thinking
A new book claims that people’s psychology and ‘animal spirits’ bring about economic downturns. It’s an argument that is both economically vulgar and politically ... unconvincing...
Review continued here: http://www.spiked-online.com/index.php/site/reviewofbooks_article/7210/