4 ms·

Beliefs and stories passed on by thousands of individuals are important factors, maybe even the main ones, in determining big shifts in the economy. This sort

Beliefs and stories passed on by thousands of individuals are important factors, maybe even the main ones, in determining big shifts in the economy. This sort of ooga-booga is why it's almost impossible to take economists very seriously. Any sort of study with pretensions to scientific rigor (look at all that fancy math!) that, at the end of the day, falls back on something like animal spirits, deserves quite a bit of mockery.

dforrestwilson 11y ago
Sorry can you explain where his analysis is wrong? He's not advocating for investing based upon animal spirits. He's explaining that it does exist and is a problem. Do you not believe that financial bubbles or manias occur?
oli5679 11y ago
It is worth noting that a majority of economists are studying narrower and more tractable problems than predicting business cycles/asset prices. Take a look at Al Roth's work on matching markets (useful for organising more efficient organ donation or school attendance systems) or Jim Heckman's work on policy evaluation (useful for measuring the impact of educational policy on lifetime earnings children. http://www.economist.com/blogs/freeexchange/2015/06/alvin-roths-new-book http://www.economist.com/blogs/freeexchange/2015/06/alvin-ro... http://www.sciencedirect.com/science/article/pii/0304407685901393 http://www.sciencedirect.com/science/article/pii/03044076859...
- __derek__ 10y ago
  > a majority of economists are studying narrower and more tractable problems than predicting business cycles/asset prices This is a good point: macro and micro are rather different beasts, especially when it comes to the "science" question.
gahahaha 11y ago
Turns out the fancy math mania among economists didn't help us leading up to and during the great recession. We should now go back and pick up again the lessons learned after the Great Depression (like Keynes' Animal spirits). Math and models are still important (they are in fact essential, without them we can't think clearly or rigorously enough) but they and their interpretations have to take into account the complexity of human nature to a greater extent, not rely on a simplistic and almost non-existent homo economicus.

dforrestwilson 11y ago

Sorry can you explain where his analysis is wrong? He's not advocating for investing based upon animal spirits. He's explaining that it does exist and is a problem. Do you not believe that financial bubbles or manias occur?

oli5679 11y ago

It is worth noting that a majority of economists are studying narrower and more tractable problems than predicting business cycles/asset prices. Take a look at Al Roth's work on matching markets (useful for organising more efficient organ donation or school attendance systems) or Jim Heckman's work on policy evaluation (useful for measuring the impact of educational policy on lifetime earnings children. http://www.economist.com/blogs/freeexchange/2015/06/alvin-roths-new-book http://www.economist.com/blogs/freeexchange/2015/06/alvin-ro... http://www.sciencedirect.com/science/article/pii/0304407685901393 http://www.sciencedirect.com/science/article/pii/03044076859...

__derek__ 10y ago
> a majority of economists are studying narrower and more tractable problems than predicting business cycles/asset prices This is a good point: macro and micro are rather different beasts, especially when it comes to the "science" question.

gahahaha 11y ago

Turns out the fancy math mania among economists didn't help us leading up to and during the great recession. We should now go back and pick up again the lessons learned after the Great Depression (like Keynes' Animal spirits). Math and models are still important (they are in fact essential, without them we can't think clearly or rigorously enough) but they and their interpretations have to take into account the complexity of human nature to a greater extent, not rely on a simplistic and almost non-existent homo economicus.