Narrative economics
The key insight, he [R. Shiller] says, is to move on from the economic assumption that people think rationally. We all know that they do not, much of the time. So economists must study how people actually think — and we think in stories.
When applying the word “narrative” we often bump against the “narrative fallacy” — the human tendency to try to turn random or disparate data into a satisfying story. But that is how we make sense of the world. Any journalist will admit that to explain a complex story you must turn it into a narrative. Anyone selling you an investment similarly does so by telling a story."
The key insight, he [R. Shiller] says, is to move on from the economic assumption that people think rationally. We all know that they do not, much of the time. So economists must study how people actually think — and we think in stories.
When applying the word “narrative” we often bump against the “narrative fallacy” — the human tendency to try to turn random or disparate data into a satisfying story. But that is how we make sense of the world. Any journalist will admit that to explain a complex story you must turn it into a narrative. Anyone selling you an investment similarly does so by telling a story."
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