Read Books This will provide a list of the books I've read with a brief review. Users are blocked, contact me for access. I welcome discussions, but I'm tired of spam.

June 23, 2010

Animal Spirits: How Human Psychology Drives the Economy, and Why It Matters for Global Capitalism by George A. Akerlof

Filed under: Uncategorized — Randolph @ 3:59 pm

Animal Spirits: How Human Psychology Drives the Economy, and Why It Matters for Global Capitalism by George A. AkerlofThis is a book on behavioral economics. The animal spirits is derived from Latin, and refers more to states of mind. Economics is driven more by perceptions and ideas about economics, sometimes irrational. The Keynesian adherence to simple profit-motivated activities can be misleading and inaccurate.

George Akerlof argues in support of behavioral economics over the more popular Keynesian economic theory. He pulls examples over the past 20 years or so to establish his argument over behavioral economic’s superiority. He posits that people work from stories about economic behavior. These stories are patters of behavior that they expect others to follow. Through the book he uses these stories to explain unemployment, recessions, other behaviors.

The book makes good use of examples and the author does take the time to explain his theory and how it differs from Keynesian economics.

Its weakness is in the approach. Some of the “real people” examples seem odd, for instance, the real person who who is young, and fresh out of school is a female professor at Harvard. This doesn’t feel like a real person and weakens the value of his example. Many of his examples, especially those from history feel either contrived or cherry-picked. In my opinion, the book would have been much stronger if he had pointed out criticisms or alternate theories and addressed them in comparison. He does provide a lot of notes, some with references, which does give it some feel of a scientific paper.

I don’t feel there is enough in the book to convince me of the strength of his theory of behavioral economics, but it does offer some real good food for thought.

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