Robert J. ShillerRezensionen

Is This An Overview?
Animal spirits are thoughts and feelings of animate people. The psychological causes of economic activity. Animal spirits are the noneconomic motives of decision making. Decisions chosen by more than just rational actors wanting mutual economic benefits. Economists tended to dismiss individual variations in the aggregate, but it is the variations produced by animal spirits that cause economic fluctuates. There are consequences to animal spirits, which leads to a role for government, to prevent the consequences from escalating.

The elements of animal spirits include confidence, fairness, corruption, money illusion, and stories. People make decisions based on the confidence they have in an option, rather than considering all possible outcomes of all options. Confidence in economic activity leads people to participate more, while a dip in confidence can prevent participation that escalates into an economic crisis. People care for fairness, and are willing to punish those who they deem are acting selfishly. Purchasing products and services risks corruption, as the claims about what was purchased can be misleading. Consumer protection is needed for purchases whose quality is difficult to verify, while consumers tend to know the effectiveness of frequently repeated purchases. People tend to think that the value of money is static, which is the money illusion, for in practice money purchases different amounts of the same product over time. Stories build the narrative of events, which defines and motivates human behavior.

Caveats?
The authors bring back the psychological aspects of Keynesian economics, with John Maynard Keynes being the originator of the term, animal spirits. While they propagate an underrepresented idea of Keynes, to rectify the misunderstanding, they also propagate misunderstanding about Adam Smith’s ideas. Smith’s work contained many noneconomic motivations for behavior. The authors recognize how Keynes’s views were stripped of their psychological values, but do not recognize that the same was done to Smith.

Disappointing- merely an overview of important consumer exploitation issues across a wide range of corporate endeavor. You will want to seek out more in depth books on each of the subjects covered here. Essentially an index of ills generated by unregulated corporate greed. This serves as an appetizer, you will be left hungry for more.

Da leggere

Prior to reading this book, I have listened to various lectures and speeches by Professor Shiller that I have found on Youtube and online. What I appreciate is that I can follow and largely understand his explanations and analysis (for the most part) as someone who did not do well with my economic courses in college. Fortunately this book was also user-friendly. It’s not written exclusively for other economists and academics.

I am trying to gain a better understanding of economics in general but also trying to understand investing and what factors affect the stock market, housing market and finance. Shiller provides an excellent overview of the American economy and history including the 1929 Stock Market crash and the 2007-2008 downturn (I read the third edition of this book that included the 2007-2008 downturn.)

There are lots of chart, data and information throughout the book. Shiller also has an informative section of how the press and media affect the Stock Market and economy. This is not an easy read but the effort was worthwhile, at least for this reader.

I read the edition of the book that was published right before the dotcom crash and it was interesting from that perspective. The book talks about how market prices can go up without no meaningful cause and as we know, it came crashing down just a few months later. I suspect that is part of the reason he and this book became well known.

In the book he is very careful not to predict a crash, but he doesn't keep secret that he thinks the prices of 1999, early 2000 were without foundation. He walks the reader through possible causes, but here he does speculate a lot. He implies and suggests without making any clear statements, nor presenting any strong evidence and that is what makes the book a bit flat and uninteresting.

A better part is where he criticizes the statement that stocks is always best. We know that stocks have almost always been best under certain circumstances, but we both cannot always control those circumstances, nor can we know if the market will behave in the past as it did in the past. We know for instance that, corrected for inflation, NASDAQ has still not recovered from the crash and it's been 17 years. At least not without including dividends (I don't have dividend numbers so I cannot say).

I would not recommend this to anyone, even though it's short.

The key point of this book is that what people believe about the economy can affect the way the economy behaves. That is, the stories, or narratives, that we tell about the economy can affect the way the economy works. As much sense as this makes intuitively, it is something that economic theory -- with its fundamental premise of completely rational economic actors -- has ignored. Shiller discusses a series of narratives about the US economy that have repeatedly taken hold. The presumption of a feed back loop between the economy and narratives about the economy could be critical for policy; if you can change the narrative, perhaps you can change performance. But Shiller doesn't take the argument much beyond there. Worth reading, quickly.½

This book is readable and probably not entirely wrong. I didn't find it compelling or life-changing. Rather, it felt like old white guys lecturing that life isn't always fair and you shouldn't believe advertising. As the daughter of a mechanic I found the shock that "Bob and George" expressed when they realized the dealer was screwing them on "maintenance packages" to be particularly amusing.

A bit of a misdescription; less a “how” and more a “that.” Along with bitcoin and the gold standard, which he argues serve similar rhetorical functions as hard-to-understand systems with magical promises, he also argues that a lack of consumer confidence narrative can itself extend recessions, as people decide not to buy stuff because things aren’t going so well. Ok, I guess.

An excellent inbetween book. Not too academic and dry but also not too simplistic. The most complete treatment of bubbles I've read.

Shiller is a great empiricist, and tests out efficient markets hypothesis through various econometric tests and survey data. Shiller actually asks investors through extensive survey data to see what their motivations and logic is, a pretty simple but radical move from assuming them to be rationally calculating agents. Through this data Shiller shows how irrational, and self contradicting investment behavior can be. Additionally, Shiller does alot of searches through news and media in order to see if the news portion of efficient markets theory holds i.e. is there actually news that explains price movements? To my knowledge both of these attempts at gathering data are novel (and in hindsight) obvious.

An interesting take on speculative bubbles. Shiller shows (at least to my satisfaction) that 1) Bubbles in asset prices do exist and 2) We should look beyond pure financial theory to explain the behavior of bubbles. Shiller explores possible explanations for increases in asset price, and shows that at least, there is no real rational basis for certain increases in prices (looking at population growth, construction price and interest rates do not explain the housing prices for example), and that certain implications of efficient markets are violated. In particular, he could not find any news to explain large price movements, and that stock prices are too volatile compared to dividends growth (an apparent violation of the Gordon discount model).

Shiller then goes on to suggest some possible explanations for the behavior of bubbles. He argues many factors, a combination of social, psychological and cultural factors. He goes in length about feedback loops, herd behavior, word of mouth contagion, and the role of media in drawing attention to issues. Shiller discusses how certain vivid stories (in particular "new era" theories) can capture the imagination of investors and unmoor asset prices. Shiller also describes how irrational enthusiasm, mixed in with a convincing story can overwhelm quantitative fact and forecasts driving self-creating bubbles. Sometimes investors, encouraged by the raise in prices, jealous of others "success" and with a gambler's high can pile on into markets. Shiller also surveys behavioral economics, in particular anchoring, and overconfidence in their roles in bubbles. This section actually seems a bit weak to me, Shiller seems to be throwing everything at the wall to see what sticks, and some of these explanations (while I believe happen to be true) are difficult if not impossible to falsify.

Ultimately, Shiller suggests improving markets by broadening participation, encouraging opinion leaders to educate investors and reducing short constraints (for example creating markets to allow investors to short asset prices such as housing easily). An enjoyable (if somewhat technical at points) read overall.

A prominent strain of investing advice asserts that market timing is hopeless, and encourages investing heavily in index funds without attempting to judge how reasonable their current price level is. I’m not sure to what extent Shiller’s own concrete investment advice - this book offers little of it - would differ, but his discussions of stock market history, real estate market history, and the efficient market hypothesis do provide a very intriguing note of caution to that sort of thinking.

la finanza vista in chiave positiva.

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.

The book was well written and straightforward in its presentation and premises. Although one can't help but agree with the author's conclusion of a stock market bubble and its long-term impact, the author presents his psychological/sociological interpretation without basis far too often. I would have liked to see more substantiation of investor behavior and their motives; too often the author made assumptions about investor motivation.

In [b:The General Theory|303615|The General Theory of Employment, Interest, and Money|John Maynard Keynes|https://d.gr-assets.com/books/1415594896s/303615.jpg|1711698], [a:John Maynard Keynes|159357|John Maynard Keynes|https://d.gr-assets.com/authors/1244623131p2/159357.jpg] 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 restatement of that argument. People are crazy, so the authors say, their behaviour is irrational and, in the Keynesian way, this can cause economies to crash and stay crashed. Only the wise hand of government on economic the tiller can save us.

This leaves several questions unanswered. Why do people make the same mistake over and over? There is no learning in the model. Why is empirical evidence used so sparingly? In cases such as 1929 and 2008-2009, there were identifiable, proximate causes for people's actions which we can turn to without invoking "animal spirits". Why is it assumed that the politicians who will save us from our irrationality are any more rational than we are?

Psychology in economics is a fascinating and emerging field, but you'd never know it from this shallow and reductive book.

"Free market equilibrium" is always maintained to the extent that there is always someone willing to sell you what you want to buy, or point out things you haven't even thought about buying, but now that they've come to your attention, you find irresistable. However, if what you want to buy makes you sick, fat, drunk, broke or dead from lung disease, it's not the fault of that juggernaut-like free market. You have been phished for a phool.

I admire the authors' attempt to level the playing field by pointing out to consumers the areas where they are most likely to be successfully phished: houses, cars, "phood and pharma", tobacco, liquor, and mortgage-backed securities based on subprime loans with phony Triple A ratings. Unless you are very canny, as the Scots say, or have better powers of resistance than most of your fellow-men, you will be phished.

The reminder that "phishing for phools" is built into the system, and we have to negotiate that system more or less successfully every day, is depressing but very real. In other words, "There's a sucker born every minute - and one to take him". There really is nothing new under the sun.

I was amused by the image of a "monkey on your shoulder", egging you on to make bad decisions, but in general, I didn't find this book as interesting as I thought it might be.

Whirlwind tour of many of the ways people can be fooled by other people, such as ready access to credit cards (people spend more than when they have to part with cash) and campaign advertising. Not much new if you are into behavioral economics; ends with a defense of government regulation to disrupt “phishing equilibria,” where a certain amount of exploitation of everyone is just accepted as normal.½

Nice commentary. It is an effort to "combine economic theory, which forms the basis for each chapter, with examples that illustrate its application."

"The phish is a way to get someone to make a decision that is to the benefit of the phished, but not to the benefit of the phool."

Great book. Explains the mentality and economic principles behind bubbles, especially the recent tech and housing bubbles.

Another Phine Mess

It seems that the capitalist world is divided into two kinds of people: phishers and phools. Those who phish look for leverage and advantage and milk it; the phools pay for it, even when they don’t need to, don’t want to, and can’t afford to. The result is financial crises, on the national level, the local level and the individual level. And it never stops. We buy too much, we buy the wrong things, and we overpay all the time. Shiller and Akerlof say the very first phool was Eve. The serpent phished her into taking something she did not want, did not need, and which she knew in advance she should not take. The cost was going to be too high. So it has been ever since, whether it’s cable bundles or junk bonds.

There’s a lot going on in this little book. It ranges from individual (struggling) bill payers to government lobbyists, drug marketing and financial services. It is of necessity cursory, and therefore incomplete. In the chapter on credit cards, which treats both merchants and consumers as phools, spending $150 billion annually for the privilege, the authors neglect the fact that to use cash is even worse. While true that credit card users tip more and spend more freely, it is also true stores price in the cost of credit cards and the premiums they give to holders. So paying cash means paying more than we should, making us even bigger phools. Similarly the War on Cancer assumes cancer is internally sourced, making it difficult if not impossible to overcome. That’s because the focus is on treatment. But even the UN says 75% of cancers today are environmental, not genetic; they can be prevented. We can reduce cancer by a whopping 75% by not polluting ourselves, our food, our air, water and soil. The phoolish analysis is leading us to the pill phishers.

“Government is the problem” is a phish for phools, the authors say. It is not only taken out of a very specific context, it diverts attention from the scammers to the government agencies that protect us from the scammers, be they financial, consumer, chemical or environmental. This is diversion and diversion is the number one tool of phishing. The book is an entertaining litany of blatant and subtle examples. Caveat emptor is still the order of the day.

The last word should go to Robert Benchley, who also said the world is divided into two kinds of people: those who divide the world into two kinds of people, and those who don’t.

David Wineberg

Shiller of the S&P/Case-Shiller home price index that's so closely watched. Shiller published this book in mid 2008, before much of the bad stuff happened. The books is very short with very large margins, so it's a quick read. I'll simply link to Ian Ayres review of the book on the Freakonomics blog as he has valid criticisms.

Shiller basically believes that information is the #1 solution for keeping such a crisis from occuring again. The government should basically subsidize financial education, subsidize financial advisers (have them charge a standard hourly fee), etc. Establish national databases of personal and business financial data so that things like FICO scores aren't so important.

He supports the creation of more markets-- home equity insurance, income insurance (in case you lose your job), continuously worked-out mortgages, and an expanded derivatives market (which he helped create) for things like home values in cities.

About the only thing that the Administration seems to have proposed that fits with what Shiller suggested is the sort of "Consumer Lending Safety Commission" that would regulate home loans, credit cards, student loans, etc.

Overall, a good simple economist's view to preventing future crises.

I give it 2.5 stars out of 5. A quick read, you should check it out sometime.

Sometimes stresses the long-term picture, but it must be noted that that is still based on trends and patners. Goes through 12 factors. Links Ash, Milgram experiments to learning about authority/majority being right-information. People have inconsistent views.

Moderately interesting, although a bit tedious. Markets are not rational, and Shiller gives chapter and verse why they aren't. Biggest take away for me is that we usually assume individual biases and irrationality cancel out, so that we can assume markets behave as though each individual is rational. Shiller explains why that irrationality doesn't cancel out across investors.

Excellent Analysis - my copy has been signed by the author when he was in Australia

I couldn't resist a book with a chapter called, 'Naturally Occurring Ponzi Processes'. That has to be my favourite title for anything in the last 10 years. Talk about the what that explains everything. "Donna, what happened to you? Are you just another fuck-up? Is that it? What happened to you?" "No. No! It's those naturally occurring ponzi processes. They get me every time. And now...(exhale)...they got me that one time too many."
This book has a lot of information you don't know you need to know, explained clearly. Even if you have no money, and the taxman doesn't talk to you about poetry, it's good to be mindful of the steps in a random walk.