Animal Spirits: How Human Psychology Drives the Economy, and Why It Matters for Global Capitalism

By George A. Akerlof, Robert J. Shiller

Categories: Business & Money

Economists George A. Akerlof and Robert J. Shiller argue that psychological forces, which John Maynard Keynes called animal spirits, drive the economy. They describe five such forces, confidence, fairness, corruption, money illusion and stories, and show how they explain booms, busts, unemployment and financial crises that standard economic theory struggles to account for. The authors argue for an active role for government in managing these swings.

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• Shane Parrish: “Akerlof and Shiller reassert the necessity of an active government role in economic policymaking by recovering the idea of animal spirits, a term John Maynard Keynes used to describe the gloom and despondence that led to the Great Depression and the changing psychology that accompanied recovery.”