Narrative Economics: How Stories Go Viral
Watch an interview with Robert Shiller about how shared stories shape our economic lives.
What popular narratives are forming about the pandemic, the economy, and the future of our society as a result of this crisis?
Experts have been warning for many years of the danger, even inevitability, of a dangerous pandemic, but it has not resonated in our minds until now. We hadn’t the imagination to think of the changes that would come with a dangerous pandemic, with extensive shelter in place. Now we have a vague fear that this is the new normal. Now stories abound of people in desperation for the next meal or evicted from their apartment for nonpayment of rent. Also stories of working from home, of virtual school and university, are on our minds, as models for our future. These narratives leave us disturbed and sometimes wondering what our places will be in this new world.
How are these narratives affecting people’s economic behavior?
Stories today have a wartime flavor of heroism, not from soldiers but from health care workers and even those who deliver our supplies. These fearsome narratives in some cases discourage spending, and may weaken the economy more than just from the virus itself. On the plus side, these narratives may incline us to care more for each other, and may actually encourage us to be loyal customers who will spend. The pandemic narratives may also lead to improvement in attitudes toward the poor, and adjustments in our institutions that affect income inequality and care for the disadvantaged.
Is it possible to shape economic narratives or counteract their negative effects?
National leaders are crucial in the shaping of narratives. If they are successful in framing narratives, they may be remembered for decades. Presidents have used words to encourage more community spirit and willingness to support each other in our spending decisions, from Franklin Roosevelt’s Great Depression–era fireside chats to George W. Bush’s admonitions after September 11, 2001, to go on living our lives undeterred by terrorists. Words from our leaders today could help prevent a recurrence of modes of thinking that have driven economic disasters of the past.