Animal Spirits by George A. Akerlof

Animal Spirits

The global financial crisis has made it painfully clear that powerful psychological forces are imperiling the wealth of nations today. From blind faith in ever-rising housing prices to plummeting confidence in capital markets, "animal spirits" are driving financial events worldwide. In this book, acclaimed economists George Akerlof and Robert Shiller challenge the economic wisdom that got us into this mess, and put forward a bold new vision that ...

Details Animal Spirits

TitleAnimal Spirits
Release DateFeb 1st, 2009
PublisherPrinceton University Press
GenreEconomics, Nonfiction, Psychology, Finance, Business

Reviews Animal Spirits

  • Hadrian
    Although I read this four years ago, I still remember it very clearly.A summary of the Keynesian 'animal spirits', or non-rational economic actions which people do, sometimes contributing to later economic crises. These include, but are not limited to, Confidence, the myth of fairness, the illusion of money, corruption, and 'Stories' as past explanations of behavior.These are applied to multiple questions, such as real estate bubbles, central ban...
  • Trevor
    Part of the reason why I found this book quite so interesting was because I’ve read lots of books about behavioural economics over the years, but they are much more interested in psychology than they are in economics. For instance, a book that I am constantly recommending and even buying for people is ‘Predictably Irrational’ – and it proudly refers to itself as being one set in behavioural economics, but really, you sort of have to squin...
  • Gordon
    The phrase “animal spirits” comes from John Maynard Keynes, the great British economist, who saw the role of emotion and irrationality as looming large in economic behavior. As Akerlof and Shiller see it, Keynes had it right, but the neo-Keynesians who followed him watered his theories down to conform more closely with the “invisible hand” classical economics of Adam Smith. So what we were left with was a model of rational economic decisi...
  • Sagar Jethani
    It was with great anticipation that I looked forward to reading "Animal Spirits". If ever there were a time for a sobering analysis of how macroeconomic events actually occur, that time was surely now. Instead, what I found was a volume which took great pains to destroy a carefully-crafted straw-man: that species of academic economist who, in defiance of common-sense, insists that people behave according to the universal dictates of rational self...
  • John
    In The General Theory, John Maynard Keynes wrote that the switches between optimism and pessimism which drive rises/falls in investment spending which, in turn, cause rises/falls in output, were driven by '"animal spirits". This was always one of the weaker points of Keynes' analysis, essentially a big shrug of the shoulders, removing any notion of economic actors rational responses to changing circumstances. This book is simply a longer restatem...
  • Ed
    As someone who trained as an economist and who has been digesting the implications of behavioural economics for economic theory, this book takes the story further: into macro-economics or how the whole economy works. Like the original work of Keynes (not the subsequent simplification), these authors (it is actually by Akerlof who won the Nobel prize for economics AND Shiller who wrote Irrational Exuberance)transform how we should see markets oper...
  • Joel
    This book is a qualitative/non-technical discussion about what is currently being debated in Macroeconomic theory. There have been several posts on different boards about this book taking a "liberal" position. If you're interested in Economics as a science, ignore them. If you're looking for a book that will bring redemption to Reagan-era supply side economics, this is not the book for you.Akerlof and Shiller are notorious advocates of Keynesian ...
  • Lucas
    The money illusion section was very good, none of the other economics books I've read have given it as much as attention as it gets here. I also really liked the chapter on the asymmetrical behaviour of compensation in economic down-turns vs. up-turns, again because the subject wasn't given significant text in other books. The book doesn't explore the solution space much- my first thought is that an progressive proportion of wages should be in th...
  • John Gurney
    Two Nobel Prize-winning economists, George Akerlof and Robert Schiller, use their version of Keynes's theory of "animal spirits" to explain past financial crises and how economies grow. They have interesting psychological ideas, such as the importance of a national "story", really a paradigm, that drives herd mentality and, thus, irrational behavior. Examples would be the recent, ill-fated real estate mania in the United States or the malaise on ...
  • Ryan Melena
    I found this book to be a significant disappointment. The only point of interest, for me, was the in-depth discussion of "money illusion" and its affects on our economy. Outside of that, the booked felt jumbled. Despite my natural proclivity to the authors' point of view I felt their arguments were poorly made. Additionally, the book seemed to stray into apologia and misinformation regarding the events that led to the current recession. It perpet...
  • Melvin Marsh, M.S.
    I was expecting a lot more psychology than there was. All of this was pretty much commonsense which even as a non-financial person, I knew several years ago even before the housing bubble burst.
  • Paul,
    Animal Spirits is a cheesy name for a good book. "Animal spirits" is a Keynesian term used to describe the effects of human psychology on the market.Akerlof correctly shows how current economic thinking, in particular the Chicago school, over-simplified mass behavior by assuming that all individuals behave as if they were rational economic actors. The truth is that humans are rational actors, but their motivations are not all economic. Akerlof ex...
  • Brian Jones
    Boy, George thinks a lot of himself.Basically, he says the behavioral economics is true, and pretty much claims to have thought of it.He makes a lot of good points, but here's the main problems:1) He claims to have "explained" economics. But he makes no predictive propositions; there's nothing quantitative. He has a narrative that is consistent with historical examples, but that's a far cry from an economic theory.2) He goes over the top for the ...
  • D.L. Morrese
    Humans are not rational animals. That's basically the central point of this relatively short book on behavioral economics. Published in 2009, it still has some valid things to say. It argues that any theory that presumes an economy moves due to the rational responses of self-interested actors in response to reasonable amounts of valid information is working under a false premise. This observation seems so obvious to me that I wonder how anyone wo...
  • Tim
    If you want to know why the economy works the way it does - this is the book for you. You are not the "rational man" that economists think you are, none of us are. And if you want to understand why they think that way, and how it screwed up our economy this book will help.Details:Akerlof and Shiller are great economic thinkers who systematically approach economics from the ground up, and focus on how our "animal spirits" affect the economy. It is...
  • Patrick
    The dawn of cognitive macroeconomicsJDN 2456563 PDT 15:10.A review of Animal Spirits by George A. Akerlof and Robert J. Shiller.When I first came to CSULB about a month and a half ago, we had an orientation for graduate students. One of the faculty members there (Seiji Steimetz, for whom I am now a graduate assistant, and whom I have come to adore) asked us all a question: "What kind of research do you want to be involved in?" Most of the student...
  • Karl Nordenstorm
    Some of the ideas and info:* People have no idea how much they should save. 1%, 5%, 10%, 50% of savings. They just look at what others do and do that. Meaning savings rates could change suddenly, as a change in fashion, causing reduced spending and a recession. (Fun fact: By various means Singapore forces everyone to save 40% of income)* Nor do people understand inflation. Most people think inflation will make things hard to afford, they do not g...
  • Thomas
    Animal Spirits is an important critique of how modern "scientific" and "quantitative" macroeconomics has failed to predict or adequately explain important phenomena in economic history, the last of which being the Great Financial crisis of this millennium. In this book Akerlof and Shiller convincingly introduce psychology to macroeconomics to bridge this gap. The main draw-back I found is that some chapters, especially the ones on financial marke...
  • David Wen
    Great book discussing the benefits and drawbacks of a capitalist economy where the "the invisible hand" is at work. There are many events that occur which fits no model of economic theory and makes the argument that no government intervention is a very poor choice of regulation in where the theory does not apply.
  • Jake Losh
    It was OK. I think it will age rather well as both a narrative of the financial crisis and as a sort of manifesto of what the "New Keynesian" approach to macroeconomics is all about, but it's not as rigorous as I'd expected. I'm also still not quite sure what's to be done to keep our "animal spirits" in check. It read more like a list of examples of irrational behavior in history, but Kindleberger and other books already treat the topic quite wel...
  • Tom
    Although I generally share Shillers' and Akerofs' views, this book is highly anecdotical and full of sophisms. Irrational Exuberance was a much better read.
  • Justin
    Very well researched, but not too actionable
  • Yanick Punter
    It didn't cover much human psychology at all. It was severely disappointing.
  • Piotr Szybicki
    Excellent explanation of how Human behavoir drives The stock market. How we go from optimizm to obsession creating bubbles.
  • Abdullah Al-Abri
    very good book on behavioural economic
  • Gabriel Palazzo
    Libro de difusión. Vale la pena.
  • Daniel Wagner
    When I learned about macroeconomics it was all supply/demand and tons of formulas. This book points out how many factors related to the human mind has a big impact in economic decisions.
  • Dan
    This was a nice overview of what I'd call New Old Keynesian economics (as opposed to old New Keynesian economics). Schiller and Akerlof are essentially arguing that non-quantifiable "animal spirits" are extremely important in determining the status of an economy, and that much economics since Keynes has neglected his key insight on animal spirits. I found myself nodding in agreement at a lot of the arguments in this book, particularly those about...
  • Joseph
    Animal Spirits should be preliminary reading for all economics courses. Whilst many were writing about the failings of Capitalism before the 08 crash, the urgency of the situation is such that now major rethinking of the role of government in regulating markets is necessary if we are going to avoid this sort of crash again. The title of this book gives a lot away. It is based on the premise that modern economic theory has become detached from fun...
  • Paola
    First of all, the good bits - this book was originally written in 2008, and the 2010 paperback edition preface states:As we write this in October 2009, we are afraid that the optimism, even if still a bit guarded, reflects an Indian summer. We do not know what lies ahead. We go along with those who consider it a good sign, at the time of this writing, that there are “green shoots” of recovery, and that forecasters are talking about growth of ...