Book of the Week: Animal Spirits

shiller My book of the week is an easy one this time around: It’s Animal Spirits: How Human Psychology Drives the Economy, and Why It Matters for Global Capitalism, by Robert Shiller and George Akerlof. I get sent a lot of books here, most of which get shelved or sent elsewhere after a few pages, but this one is very good.

Admittedly, I’m biased as a fan of both Shiller’s and Akerlof’s. Believe me , however, when I say the blessedly brief Animal Spirits is a thoughtful and well-written look at how economics discarded psychology and lost its way on the trip from Adam Smith, through Keynesianism, to laissez-faire. The book puts the current crisis in a useful economic context, with consistent and practical selections from behavioral finance illuminating everything along the way. While it’s not truly a book about the current depression, I am sure it will remain on my list of recommended books touching on the subject.

Highly recommended.

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Comments

  1. Seth says:

    From your description I'm concerned that this book isn't much more than an advertisement for more "behavioral" economics. That's all well and good, but the real problem isn't that economics lost touch with psychology. The issue is that it lost sight of politics.

    Political power sets boundary conditions, markets equilibrate within those boundary conditions.