|  | Authors: George A. Akerlof, Robert J. Shiller
Publisher: Princeton University Press
List Price: $24.95
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as of 11/23/2009 22:46 CST details
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Rating:  55 reviews
Sales Rank: 1398
Languages: English (Original Language), English (Unknown), English (Published)
Media: Hardcover
Pages: 264
Number Of Items: 1
Shipping Weight (lbs): 1.2
Dimensions (in): 9.3 x 6 x 0.9
ISBN: 0691142335
Dewey Decimal Number: 330.122019
EAN: 9780691142333
ASIN: 0691142335
Publication Date: February 18, 2009
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Showing reviews 11-15 of 55
 Akerlof & Shiller, Animal Spirits: A Misnomer for Their Sound Economics September 4, 2009
Prof D. M. Nuti (Rome, Italy)
1 out of 3 found this review helpful
Animal Spirits - How Human Psychology Drives The Economy, and Why It Matters for Global Capitalism, by George A. Akerlof and Robert J. Shiller, was published earlier this year by Princeton University Press, Princeton and Oxford, 2009. It is a timely book, as it addresses the questions of why most economists failed to foresee the current global crisis, to provide explanations for its occurrence and to suggest effective remedies to counteract it. But above all it is a refreshingly original, formidable set of economic propositions, corrosive and at the same time constructive, with pointed and valuable policy implications.
Bob Solow's book-cover endorsement - "... a sorely needed corrective" - is an understatement. The book should be highly recommended in the reading lists of all social sciences students in every year of their curriculum, and made compulsory reading for government officials, businessmen and anybody operating in credit and financial markets. If I could afford it I would do for the book what a US millionaire is reputed to have done for Joseph Heller's Catch 22, advertising in the press to give away free copies to the general public.
Akerlof and Shiller claim that "Keynes appreciated that most economic activity results from rational economic motivations - but also that much economic activity is governed by animal spirits" (p. ix). They understand these as "individual feelings, impressions and passions" (p. 1), "a basic mental energy and life force" (p. 3) and "describe five different aspects of animal spirits ... confidence, fairness, corruption and antisocial behaviour, money illusion, and stories" (p.5). Confidence changes interact with the state of the economy and amplify disturbances. Concerns about fairness affect the setting of prices and wages. Temptations of corrupt and antisocial behaviour have a significant role in the economy. The public is confused by inflation and deflation and suffers from money illusion. "Finally, our sense of reality, of who we are and what we are doing, is intertwined with the story of our lives and the lives of others. The aggregate of such stories is a national or international story, which itself plays an important role in the economy" (p.6). The book first describes how these five animal spirits affect economic decisions, then argues that they play a crucial role in answering eight crucial questions:
"1. Why do economies fall into depression? 2. Why do central bankers have power over the economy, insofar as they do? 3. Why are there people who can't find a job? 4. Why is there a trade-off between inflation and unemployment in the long run? 5. Why is saving for the future so arbitrary? 6. Why are financial prices and corporate investments so volatile? 7. Why do real estate markets go through cycles? 8. Why does poverty persist for generations among disadvantaged minorities?". Moreover, a post-script to Chapter 7 includes their analysis of the current crisis and policy recommendations.
Akerlof and Shiller criticise and de-bunk many conventional economic theories, the foundations of the hyper-liberal tradition associated with the Thatcher and Reagan governments: from rational expectations to the efficient market hypothesis, from the natural rate of unemployment - and the associated denial of a trade-off between unemployment and inflation - to the very notion of voluntary unemployment, from the alleged benefits of de-regulation to the significance of Tobin's q (the ratio between the current stock exchange valuation of a company's shares and bonds and the replacement cost of its productive assets: a high q is supposed to promote investment but not always does). We are presented, instead, with waves of optimism and pessimism, manias, euphoria, panics, dishonesty, booms and busts, and the problems of how to put back together again the broken pieces of the financial Humpty-Dumpty.
The conclusion is that "... capitalism can give us the best of all possible worlds, but it does so only on a playing field where the government sets the rules and acts as a referee. Yet we are not really in a crisis for capitalism. We must merely recognise that capitalism must live within certain rules". "And ... in our view capitalism does not just sell people what they really want; it also sells them what they think they want. Especially in financial markets, this leads to excesses..."(p.173).
All very convincing, but for reasons largely different from the ones they offer. Keynes mentioned "animal spirits" as a shorthand for the driving force of entrepreneurship in general and particularly investment. Akerlof and Shiller turn it into a generalised motive that pervades and dominates the whole economy; they dissect the genus into the five species listed above, quite arbitrary and each of them still something of a black box. They identify animal spirits with 1) irrational behaviour and 2) non-economic motives, which is neither necessary nor useful. A powerful critique, but we are left clutching only a few straws. In the end animal spirits become a trite and somewhat irritating cliché, like the fuzzy drawings by Edward Koren supposed to capture them, and of little value added for our understanding of the modern economy.
CONTINUES... LINK TO FULL REVIEW; http://dmarionuti.blogspot.com/2009/09/akerlof-shiller-animal-spirits-misnomer.html
 It takes the dismal out of economics! September 3, 2009
Brendan F. Gannon
0 out of 1 found this review helpful
While it has the look and feel of a college text this book has enough interesting anecdotes and historical references to keep your interest. It is easy to understand and neatly organized for the reader. If you are looking for the explanation of the global meltdown of 2008 this is it.
Excellent choice! September 2, 2009
Katrine Watson (Lake Tahoe)
0 out of 1 found this review helpful
Very interesting take on the market. Different slant from the usual and one, as a Realtor dealing with emotions surrounding real estate purchases, that's easy to understand.
Not Much Research Here August 25, 2009
Bassman (San Mateo, CA)
Given the subtitle "How Human Psychology Drives the Economy, and Why it Matters for Global Capitalism," I expected this book to relate research and known principals in the behavioral sciences to economics. Although the book was a worthwhile read, it didn't live up to these expectations. A few studies from the field of behavioral economics and consumer research provided a minimal foundation supporting the authors' view that actual human behavior does not correspond well to the assumptions of classical economics. But mostly, a layperson's view of human behavior is used to refute economic assumptions rather than insights from the behavioral sciences. The authors make some important points about problems with classical economic assumptions. However, the book's emphasis on economic history, theory and assumptions of a rational economic decision-maker, rather the vast expanse of knowlege regarding the way people really make decisions and respond to their environment was disappointing. Books from authors like Ariely and Thaler and Sunstein (who the authors cite) provide better insight into human behavior as it relates to economic decision-making and provide a better bridge between the discpines of economics and psychology.
Arrived in perfect condition; timely shipping and cost effective. August 20, 2009
Julie A. Brewer (San Francisco)
0 out of 3 found this review helpful
This item cost substantially less purchased on Amazon.com. It arrived on a timely basis and was in brand-new condition. It is a good read for economic majors or anyone interested in the science of how people make choices about spending their money.
Showing reviews 11-15 of 55
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