Introduction
You often see macroeconomic forecasts fail because standard models ignore how popular beliefs spread. Traditional economics assumes people make purely rational decisions based on numbers, yet financial panics and housing booms clearly stem from contagious human stories.
Popular narratives and contagions drive economic fluctuations far more than traditional quantitative models acknowledge.
Robert J. Shiller introduces narrative economics to study the spread and dynamics of popular stories, bridging epidemiology, history, and economic theory. You will explore how constellations of human ideas shape spending, saving, and investing.
Consider these questions as you read:
- How do contagious stories go viral?
- Why do economic panics start spontaneously?
- How do narratives alter human behavior?
1. An Adventure in Consilience
Traditional economic models largely ignore public beliefs, focusing instead on abstract mathematical forces or short-run statistical data. Narrative economics fills this gap by studying popular stories that go viral, recognizing that ideas like financial panic, bubbles, or technological unemployment actively drive economic decisions.
Economic analysis requires integrating knowledge across disciplines and applying epidemiological models to track the spread of contagious thought viruses.
Frederick Lewis Allen's 1931 bestseller Only Yesterday described contagious narratives of sudden fortunes during the Roaring Twenties, illustrating how speculative stories contributed to the 1929 stock market crash and the Great Depression.
Conventional macroeconomic forecasters frequently fail to predict major recessions because they ignore public beliefs and popular narratives. A Fathom Consulting study showed that out of 469 recessions forecasted by the International Monetary Fund across 194 countries since 1988, a recession was successfully forecasted in the preceding year only 17 times. The International Monetary Fund also predicted recessions that did not occur 47 times.
John Maynard Keynes successfully forecasted geopolitical and economic disasters by paying close attention to human emotions and popular interpretations of treaties. In his 1919 book Economic Consequences of the Peace, John Maynard Keynes predicted that heavy reparations imposed on Germany by the Versailles treaty would foster deep bitterness and inevitably lead to another devastating civil war. This failure cost sixty-two million lives during World War II after twenty years of lingering anger.
Epidemic curves and thought viruses
Understanding economic changes requires consilience, or the unity of knowledge across academic disciplines, bridging the sciences and the humanities. Because the economy is composed of conscious living people reacting to stories with emotional resonance, economists must draw concepts from history, sociology, psychology, literary studies, neuroscience, and epidemiology. William Whewell coined the term consilience in 1840, and biologist E. O. Wilson popularized it in 1994 to emphasize the integration of knowledge across differing academic fields.
Epidemiological models of disease contagion can be mathematically adapted to track the spread of economic narratives and thought viruses. Medical schools have spent a century developing mathematical models to forecast disease epidemics. By mapping how ideas transmit through populations similarly to pathogens, economists can better understand the rising and falling curves of economic enthusiasm and panic. Epidemiologists successfully chart epidemic curves like the newly reported Ebola cases in Lofa County, Liberia, providing a structural framework that can be applied to economic narratives.
Literary structures and master plots
Human brains respond to recurring narrative structures and metaphors that unconsciously shape economic reasoning and behavior. Literary theorists have demonstrated that human stories rely on a finite set of master plots or formulas, indicating that the human brain possesses built-in structures for storytelling. Furthermore, common metaphors like a market crash activate specific neural pathways and influence conclusions. Christopher Booker argued that there are only seven basic plots, such as overcoming the monster, rags to riches, and the quest, which constantly repeat with different names and circumstances. Ronald B. Tobias classified twenty master plots in all of fiction.
Cryptocurrency narratives draw emotional resonance from historical anarchist movements and modern anxieties about automation and job loss. The Bitcoin phenomenon mirrors the nineteenth-century anarchist ideals of Pierre-Joseph Proudhon, who opposed government oversight. Furthermore, it feeds on contemporary Luddite fears that artificial intelligence and automation will gradually eliminate human necessity and employment. Sterlin Lujan wrote on Bitcoin.org in 2016 that Bitcoin was built as a reaction against corrupt governments and financial institutions to function as a monetary weapon poised to undermine authority.
2. Spontaneity and Virality of Stories
Human storytelling instincts and social amplification mechanisms determine whether creative works and economic ideas go viral.
You can observe that highbrow economic theories and mathematical models circulate and follow the same hump-shaped epidemic life cycle as popular stories. Academic and professional economic models experience a long gestational interval as they evolve from peculiar ideas into recognized concepts through seminars, conferences, and textbooks before eventually losing contagion and becoming stale. Google Ngrams results for the IS-LM model, the multiplier-accelerator model, the overlapping generations model, and the real business cycle model all show hump-shaped popularity patterns over decades. This pattern reflects the 1937 publication of the IS-LM model by Sir John Hicks, 1939 for Paul A. Samuelson's multiplier-accelerator model, 1958 for Samuelson's overlapping generations model, and 1982 for Finn E. Kydland and Edward C. Prescott's real business cycle model, measured across a 1940 to 2008 Google Ngrams tracking window. Large-scale economic events are driven not by isolated stories, but by constellations of mutually reinforcing narratives and confluences of unrelated trends. Credibility for a specific narrative relies on an existing set of extant stories that make it sound plausible. Furthermore, confluences of seemingly unrelated narratives occurring simultaneously can combine to create massive economic outcomes like stock market crashes or recessions. The 2000 stock market peak was driven by a confluence of a dozen precipitating factors including the World Wide Web, the triumph of capitalism, baby boomers retiring, and a rising culture of gambling. This peak coincided with the publication of Irrational Exuberance, while a pullback by 20% of a country's population can tip an economy into a recession.
Scripts and visual aids
Humans possess an innate storytelling instinct and rely on spontaneous narratives to interpret reality, organize social movements, and drive historical change. From dreaming to social protests, human thinking is structured around narratives characterized by human interest, characters, and settings. Activists often leverage these spontaneous narratives to ignite mass social movements. Jean-Paul Sartre made early observations on storytelling in 1938, while the 1960 sit-in movement began spontaneously with four students from Greensboro Agricultural and Technical College sitting patiently at a white-only lunch counter on February 1, 1960, spreading rapidly into a national phenomenon. Harriet Beecher Stowe published Uncle Tom's Cabin in 1852, preceding the American Civil War in 1861.
People adopt established scripts and behavioral norms when navigating ambiguous situations, yet simple and beneficial ideas often fail to go viral unless properly packaged with glamour. Traditional economic models assume utility maximization, but humans frequently rely on social scripts and imitation. Brilliant inventions can languish for decades until a specific narrative package, visual appeal, or association with glamour unlocks widespread contagion. An early wheeled trunk patent appeared in 1887, followed by John Allan May's efforts to sell a wheeled suitcase in 1932. May's wife grew tired of hearing about the idea in 1937, and Bernard Sadow invented his wheeled suitcase in 1972. Robert Plath introduced Rollaboards in 1991 with newspaper ads, and 1993 ads cited them as the first choice of aircrews worldwide.
Experiments demonstrate that the success of creative works depends heavily on social amplification rather than intrinsic quality alone. When people can observe the prior choices and popularity rankings of others, random initial choices get amplified into major hits, creating high inequality of success across different social groups. Matthew J. Salganik and his colleagues set up an artificial online music market where participants downloaded unknown songs, proving that shared visibility of download counts drastically amplified random initial hits compared to independent conditions across eight worlds into which subjects in the shared condition were divided.
Supply-side narrative constellations
Striking visual aids and vivid anecdotes lower the forgetting rate of a narrative, helping punchy concepts like the Laffer curve go viral despite objections from experts. The Laffer curve gained immense public contagion through a colorful anecdote about drawing an inverted-U tax revenue curve on a restaurant napkin. Visual details engage human memory and help transform abstract economic ideas into iconic cultural memories. Art Laffer famously sketched his tax curve on a napkin during a 1974 dinner with Dick Cheney, Donald Rumsfeld, and Jude Wanniski at the Two Continents restaurant in Washington, DC, which Jude Wanniski featured in his 1978 book The Way the World Works, backed by ProQuest News & Newspapers data tracking from 1950 to 2019 and Google Ngrams tracking from 1950 to 2008.
The Laffer curve was part of a broader supply-side economics narrative constellation that successfully propelled major tax cuts and pro-entrepreneurship policies.
Supply-side narratives combined stories of government incompetence, punitive taxation, and extreme tax brackets above 100% to create an intense public mandate for tax cutting and deregulation during the late 1970s and 1980s. Stories circulated widely about Swedish film director Ingmar Bergman and the Pomperipossa effect, alongside the passage of California's Proposition 13 property tax limitation in 1978. These events aligned with the Reagan administration's top federal income tax reduction from 70% to 28% from 1981 to 1989, a top corporate profits tax rate cut from 46% to 34% in 1981, and a capital gains tax rate cut from 28% to 20% in 1981 returning to 28% in 1987. Media coverage reflected this shift, with 33 stories in ProQuest featuring highest tax bracket in the 1950s versus 520 stories in the 1980s.
3. Neurological Foundations and Affect
Brain structures, fear circuitry, and affect heuristics cause people to make speculative economic decisions based on mental models of others.
The human brain has specific neurological structures that predispose people to create and convey chronological sequences of events that trigger emotions. Brain surgeon Wilder Penfield stimulated gray matter in patients' temporal lobes, causing them to hear an orchestra playing the exact same piece of music or recount a specific dream sequence. Sharing stories engages regions related to self-presentation and mental concepts. Dramatic narratives release oxytocin and cortisol.
Financial panics and excessive risk-taking are driven by primitive mammalian brain structures and evolutionary fear management mechanisms rather than pure rationality. In 2017, the Federal Deposit Insurance Corporation reported that US banks were taking excessive risks by extending investment maturities to reach for yield after nearly ten years of low interest rates. When faced with complex decisions like banking investments during prolonged low interest rates, you may rely on evolutionary fear circuits involving the amygdala and hippocampus. Memories of past crises or contagious narratives trigger these circuits, leading to collective anxiety similar to post-traumatic stress or the pervasive fear under totalitarian regimes.
Engineered marketing tools like book jackets and company logos act as contagious catalysts that increase the spread of economic narratives through phishing equilibria. Poet Dorothea Lawrence Mann commented in 1921 on public resistance to the newly invented book jacket, which publishers introduced to display endorsements and artwork. Publishers and marketers design visual markers not merely to inform, but to maximize contagion. In competitive markets, firms are forced to use such manipulations, establishing a phishing equilibrium where a certain level of narrative dishonesty or commercial display becomes permanent.
Theory of mind and beauty contests
Economic actors make speculative investments based on theory of mind, trying to anticipate what other investors believe others will find attractive. Keynes described a newspaper contest where readers submitted lists of the six prettiest faces from one hundred photographs, aiming to match the most popular collective choice rather than their own personal preference. John Maynard Keynes introduced the beauty contest metaphor in 1936 to explain that speculative markets are driven by participants guessing the average opinion of other participants rather than evaluating fundamental business data. This same mechanism governs how people select stories to retell, choosing narratives designed to match the perceived mental models of others.
Unrelated emotional triggers and vivid details can distort risk assessment and alter economic confidence through the affect heuristic. Researchers found that survey respondents assigned significantly higher probabilities to a stock market crash if an earthquake had occurred within thirty miles of their zip code within thirty days during an ongoing questionnaire survey of high-income Americans in 1989. People experiencing strong emotions or vivid mental images tend to transfer those feelings to completely unrelated economic or political judgments. Source monitoring limitations in the brain cause people to mistake fictitious or irrelevant inputs for valid risk indicators, affecting everything from stock market crash probabilities to local voting behavior.
Flashbulb memories and fake news
Causality between narratives and the economy runs both ways: contagious narratives cause economic events, and economic events alter narratives. On October 15, 1929, Yale Professor Irving Fisher stated that the stock market had reached a permanently high plateau shortly before the historic crash, generating an iconic phrase that became an epidemic. While economists often assume causality flows exclusively from real economic shifts to popular reactions, new contagious narratives act as exogenous causative innovations. Cultural entrepreneurs invent stories that spread like viral mutations, guiding public expectations and creating self-fulfilling prophecies that shape aggregate economic activity.
Controlled experiments across multiple disciplines demonstrate that narrative messages are consistently more persuasive and memorable than statistical or analytical presentations. Researchers Marcel Machill and coauthors presented TV news reports on air pollution to control and experimental groups, finding that framing the report around a baker suffering health problems resulted in better retention. Studies in marketing, education, law, journalism, and philanthropy show that narrative transportation allows individuals to imagine themselves within a story and identify with protagonists. This approach increases message retention, learning outcomes, and behavioral compliance even when logical or statistical cases are weak.
Shocking, emotionally charged events produce flashbulb memories that anchor contagious narrative constellations and influence long-term economic behavior. Following the September 11, 2001 terrorist attacks, President George W. Bush urged Americans to return to work and resume traveling, helping fuel a rapid economic recovery that ended one of the shortest recessions in US history, which began in March 2001 and ended in November 2001. When you experience or hear about a dramatic shock, your brain records vivid episodic details linked to shared social identities. These flashbulb memories form the nucleus of narratives that motivate sudden changes in economic confidence and spending, sometimes reversing economic recessions when countered by inspiring leadership scripts.
Fake news, fictional narratives, and theatrical spectacles are a permanent feature of human nature that directly influence economic outcomes. ProQuest newspaper searches show that reports of fake wrestling matches date back to at least 1890, and ancient Romans similarly watched staged theatrical combat known as prolusio before gladiatorial fights. Because source monitoring is imperfect, you readily spread titillating stories, urban legends, and fake spectacles without verifying their factual accuracy. Audiences engage with obvious fabrications like fake wrestling matches to stimulate their imaginations, proving that emotional spectacle and entertainment drive narrative contagion independently of objective truth.
4. Seven Propositions of Narrative Economics
Economic epidemics follow specific patterns that explain how ideas spread and shape behavior. You can understand these contagions through seven foundational propositions regarding their speed, talk volume, constellations, changing impact, truth immunity, repetition opportunities, and human-interest attachment.
Economic narratives vary greatly in speed, require repetition, form constellations, and spread through attention and identity rather than objective truth alone.
Recurrence and mutation
Narrative epidemics can be fast or slow, and big or small, often lasting longer than standard economic data series. Following the October 19, 1987, stock market crash, 97 percent of surveyed US high-income individuals heard about it on the day of the drop through direct word of mouth. The average response time recorded was 1:56 p.m. Eastern Time.
Important economic narratives may comprise a very small percentage of popular talk. In 1932, journalist Arthur Krock traveled 10,000 miles across twenty US cities and found that casual conversations were largely banal, but people were deeply haunted by desperation narratives.
Constellations of multiple related stories exert far more impact on imagination and economic behavior than any single isolated narrative. Cryptocurrencies are backed by a vast constellation of stories, including the tale of singer Lily Allen turning down Bitcoin in 2009 for a performance and missing out on billions. Nearly two thousand cryptocurrencies competed with the original Bitcoin as of 2018.
The economic impact of narratives may change through time. When World War I started in 1914, the New York Stock Exchange closed for months due to panicky rumors and a European gold rush. The start of World War II in 1939 saw the Standard & Poor's Composite Index gain 9.6 percent in a single trading day because people remembered WWI armament profits.
Perennial narrative constellations
False economic narratives can spread rapidly and persist long after being disproven because contagion is driven by novelty rather than truth. A 2018 study by Soroush Vosoughi and coauthors analyzing 126,000 rumors spread by three million people found that false stories had six times the retweeting rate for true stories. Six fact-checking websites showed 95 to 98 percent agreement on story truth or falsity.
Contagion of economic narratives builds on opportunities for repetition. The song 'Happy Birthday to You' grew exponentially in the 1920s and 1930s by mutating from an 1893 publication year of the original song 'Good Morning to All' and attaching itself to the popular and recurring ritual of birthday parties. Warner/Chappell Music claimed an 1835 copyright that was lost in 2016.
Narratives thrive on attachment: human interest, identity, and patriotism. Mason Locke Weems published the fabricated story of six-year-old George Washington chopping down a cherry tree and declaring he could not tell a lie shortly after Washington's death in 1799. This tale became a foundational US moral and patriotic anecdote, generating 188,000 Google hits for the terms 'I can't tell a lie' and 'Washington' compared to 102,000 hits for 'I can't tell a lie' and 'Lincoln'.
Economic narratives survive across generations through recurrence and mutation, adapting to new contexts while retaining core themes. The fear of labor-saving machines replacing jobs created anxiety during the 1930s Great Depression, but the same narrative mutated to create a sense of opportunity during the 1990s dot-com boom. History's major economic downturns are shaped by nine perennial narrative constellations that reappear in shifting forms. The National Bureau of Economic Research chronicles US business cycle expansions and contractions starting from 1854, documenting severe events like the 1873-1879 depression that sparked Henry George's best-selling critique of inequality, Progress and Poverty.
5. Confidence, Panics, and Frugality
Industrialized economies have experienced a succession of three major confidence narratives over the centuries: financial panic, business confidence, and consumer confidence. Financial panic narratives came first, reflecting psychological stories about banking crises. They were followed by business confidence narratives attributing slow economic activity to general pessimism and reluctance to expand or hire, and later by consumer confidence narratives blaming recessions on sudden drops in individual consumer spending.
Economic fluctuations are driven by shifting confidence narratives, the fear of fear itself, and perennial conflicts between frugality and conspicuous consumption.
Figure 10.1 plots the succession and growth paths of financial panic, business confidence, and consumer confidence narratives since 1800. The recovery of confidence after major financial panics has historically relied on powerful celebrity narratives, such as J. P. Morgan's 1907 banking system bailout. During the Panic of 1907, in the absence of a central bank, J. P. Morgan used his own money and rallied other bankers to bail out the financial system. This narrative of a powerful, public-spirited individual hero shaped the creation of the Federal Reserve System and established a template where every Fed chair acts as a J. P. Morgan avatar. J. P. Morgan built his central office building at 23 Wall Street in 1913, choosing a strangely small and modest design directly opposite the New York Stock Exchange and across from Federal Hall to project public spirit.
Concepts like crowd psychology and suggestibility gained traction during the late nineteenth and early twentieth centuries, challenging the model of the rational economic man. Suggestibility implies that human behavior is subconsciously imitative and reactive, causing people to act as if in a dream or part of an impressionable herd. If people believe others will panic, they attempt to anticipate herd movements, thereby contributing to instability and economic downturns. Boris Sidis demonstrated suggestibility in the Harvard Psychological Laboratory in 1898 by showing how a person sitting opposite him would instinctively roll up a newspaper or drink water just by watching him do it.
The autosuggestion movement popularized the belief that mental attitudes and positive self-affirmations could directly influence personal success and broader economic outcomes. Propagated widely by figures like Emile Coué and Napoleon Hill in the 1920s and 1930s, the autosuggestion narrative claimed that people fail because they lack self-belief. It taught individuals to program their subconscious minds with positive affirmations, acting as a mutation of earlier hypnosis narratives. French psychologist Emile Coué went on a US book tour in 1922 advising people to frequently recite the affirmation, Every day in every way I get better and better.
- Recite frequently the affirmation: Every day in every way I get better and better.
- Channel the power of the subconscious mind to adopt a positive, wealth-building attitude.
The mid-nineteenth-century rise of scientific weather forecasting inspired popular analogies to economic forecasting, viewing public confidence changes as shifting atmospheric conditions. Following the invention of the telegraph and the barograph, weather forecasts demonstrated what science could achieve and led people to view economic recoveries or recessions as winds or air pressure changes that are in the air. Because weather forecasters could predict storms, the public expected economists to forecast recessions, often creating self-fulfilling prophecies when warnings caused people to halt economic activity. In November 1854, scientists used telegraph data during the Crimean War to prove two storms were actually a single storm and provided a forecast that saved British and French fleets.
Political and thought leaders during the Great Depression combated economic panic by framing fear itself as the primary threat, establishing a viral rhetorical motif. Prominent figures argued that reckless talk and unreasoning terror caused market stampedes, which created an environment where the public assumed leaders practiced false optimism. Presidents and officials actively sought to boost public confidence through speeches and radio addresses, asking citizens for courage and selflessness to prevent bank runs. Franklin Roosevelt famously stated in his 1933 inaugural address that the only thing we have to fear is fear itself, an idea previously articulated by figures like Thomas Mullen and Irving Fisher.
The Great Depression shifted economic measurement toward modern statistical indicators and embedded stark visual and literary narratives of mass unemployment and poverty. Before the 1930s, statistics did not reliably isolate involuntary unemployment from other non-working categories. As the decade progressed, narratives incorporated the Dust Bowl catastrophe, shantytowns known as Hoovervilles, breadlines, and best-selling literature, cementing a lasting cultural memory of economic trauma. John Steinbeck's 1939 novel The Grapes of Wrath and Dorothea Lange's photographs of Dust Bowl migrants created the enduring visual and narrative legacy of the Great Depression.
Nineteenth-century bank run narratives and Great Depression psychological fears reemerged with force during the 2007-2009 global financial crisis. When institutions like Northern Rock in the United Kingdom experienced sudden bank runs in 2007, it triggered international skittishness and subsequent runs on American entities like Washington Mutual and the Reserve Prime Fund, compelling governments to issue unconventional guarantees to prevent systemic panic. The 2007 Northern Rock bank run in the United Kingdom was the first banking panic there since 1866, reviving ancient narratives of panicked depositors outside closed doors.
The mutating American Dream and frugality
Economic behavior is driven by the perpetual conflict between frugality narratives and conspicuous consumption narratives, which dictate how people save and spend. Modesty and anti-ostentation narratives have ancient roots, often emerging during hard times as a reaction against excessive wealth. Conversely, conspicuous consumption narratives assert that displaying success is necessary to prove achievement and power, significantly impacting macroeconomic conditions. Sumptuary laws in ancient Greece, Rome, China, and Japan historically forbade excess ostentation.
Modesty fashions, anti-ostentation feelings, and the American Dream mutate across generations to reshape spending and borrowing.
During the Great Depression, human tragedy narratives and concerns over family morale fostered widespread voluntary austerity that prolonged the economic downturn. When neighbors suffered through job losses and foreclosures, engaging in conspicuous consumption was perceived as deeply unempathetic. Families practiced self-imposed austerity by postponing large purchases to manage family spirits, which inadvertently deepened the economic contraction. The phrase keep up with the Joneses grew rapidly in use during the 1930s to disparage keeping up appearances through buying what successful neighbors buy.
Economic hardship gave rise to poverty chic and specific low-cost product crazes that reflected changing social norms around the display of wealth. Being unable to afford luxury items became a matter of pride rather than shame, leading to popular behavioral shifts such as riding bicycles to work, buying cheap cardboard jigsaw puzzles, and wearing denim. These practices reduced spending on expensive goods and slowed the economic recovery. In 1934, Levi Strauss launched Lady Levi’s for women, and Vogue featured its first blue jeans cover model in the 1930s.
The frugality narrative reappeared decades later in Japan during its economic stagnation, showing that cultural models of honest poverty recur across different eras and countries. Following the collapse of the Japanese economic bubble in 1990, consumers shifted from spending sprees to emulating historical ascetic figures who rejected worldly goods. A book titled The Philosophy of Honest Poverty about 18th-century hermit monk Ryokan sold 350,000 copies starting in September 1993.
James Truslow Adams coined the phrase American Dream in 1931, initiating a long-term viral narrative that championed equal opportunity and a better social order. The term spread slowly at first through intellectual discourse and plays before achieving massive cultural resonance, largely propelled by prominent civil rights figures who linked it to national egalitarian values. Martin Luther King, Jr. used the dream concept centrally in his 1963 I Have a Dream speech during the march on Washington, DC.
Over time, the American Dream narrative mutated from an intellectual ideal of social order into a justification for homeownership and conspicuous consumption. Advertisers, government-sponsored enterprises, and politicians adopted the phrase to promote real estate and consumer spending by tying homeownership to patriotism and moral rectitude, which ultimately contributed to the 2007-2009 housing bubble. In 2003, Fannie Mae adopted the advertising slogan As the American Dream Goes, So Do We, and Congress passed the American Dream Downpayment Assistance Act.
Institutional campaigns by real estate boards systematically worked to normalize household debt and promote homeownership as a mark of success and patriotism. Beginning in the early twentieth century with campaigns like Own Your Own Home and Better Homes in America, real estate groups combated cultural taboos against borrowing money, reframing mortgages from a disgrace into standard financial practice used by corporations and governments. Hill Ferguson launched the Own Your Own Home campaign in 1914 under the National Association of Real Estate Boards, using display advertisements to assure the public that mortgages are respectable.
- Do not let the idea of a mortgage scare you.
- Acknowledge that mortgages are used by the biggest corporations and the United States government.
Governments and business chambers launched coordinated Buy Now campaigns to counteract contagious consumer narratives predicting falling prices and restore spending confidence. During the Great Depression, groups like the Washington, DC, Chamber of Commerce in 1930 and President Franklin Roosevelt in 1933 deployed patriotic campaigns urging citizens to overcome their impulse to wait for lower prices. These campaigns used pulpits, seasonal advice on canning, and moral appeals to stimulate production and relieve unemployment. The 1930 Buy Now for Prosperity campaign enlisted clergymen to preach prosperity through their pulpits to stimulate economic activity.
- Preach prosperity through church pulpits to stimulate production and relieve unemployment.
- Make a special effort to buy retail products in August by capitalizing on seasonal canning time for fruits and vegetables.
10 Key Ideas
- Popular narratives and contagions drive economic fluctuations far more than traditional quantitative models acknowledge.
- Economic analysis requires integrating knowledge across disciplines and applying epidemiological models to track the spread of contagious thought viruses.
- Human storytelling instincts and social amplification mechanisms determine whether creative works and economic ideas go viral.
- Brain structures, fear circuitry, and affect heuristics cause people to make speculative economic decisions based on mental models of others.
- Economic narratives vary greatly in speed, require repetition, form constellations, and spread through attention and identity rather than objective truth alone.
- Economic fluctuations are driven by shifting confidence narratives, the fear of fear itself, and perennial conflicts between frugality and conspicuous consumption.
- Modesty fashions, anti-ostentation feelings, and the American Dream mutate across generations to reshape spending and borrowing.
- The Laffer curve was part of a broader supply-side economics narrative constellation that successfully propelled major tax cuts and pro-entrepreneurship policies.
- Economic actors make speculative investments based on theory of mind, trying to anticipate what other investors believe others will find attractive.
- The Great Depression shifted economic measurement toward modern statistical indicators and embedded stark visual and literary narratives of mass unemployment and poverty.