I'm a huge Robert Shiller fan, but somehow missed that he had a new book called Narrative Economics. When someone at work mentioned it, I checked it out from the library right away and read it. The book's thesis is that economists spend too much time analyzing models like interest rates but should consider ideas and stories going viral and thus causing economic events.
To back this up, the book actually goes out and proposes several different narratives/stories that could have created/prolonged the great depression. The stories all seem rather plausible but there's no proof whatsoever that these stories had massive impact. Even worse, there's no guidance as to how you could have used the stories to predict what had happened.
This book more than anything else, proved to me that if you actually want to do investing, numbers are the way to go. What a surprising waste of time.
3 comments:
Warren Buffett says that any company that has an economist on staff has one employee too many.
I am not sure "political economy," as economics used to be called, isn't too useful.
Although I do read a lot of books by economists, I find it mostly entertainment, rather than actionable.
They tend to parrot whatever policy is good for the rich, IMHO.
Shiller and Krugman don't just talk about what's good for rich people (and neither does Joe Stiglitz), so they have a lot of credibility with me. What you say does apply to Greg Mankiw, Larry Summers, etc.
Also: Hal Varian was an economist at Google and designed the ads auction system. He added a huge amount of value.
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