Sunday, May 22, 2011

Book Review: Animal Spirits

I must say that this was one of the best books on economics I have read in a long time. Unfortunately, the title lent itself poorly to my college/hippie town because I was often asked to tell people what their animal spirits were when they saw me reading.

The book itself is broken down into questions that the authors, Robert Shiller and George Akerlof, attempt to answer based on their theory of irrationality and exuberance. They claim that often the reasons for economic malfunction are due to behavior that is far from rational. I loved this book because it captures extremely well my general belief in economics. Unfortunately, not everyone is an economist. Most people don't quite pick up on rational behavior because they aren't well-informed, dumb, or even just too busy to care. Classical economics reasons that people should behavior rationally and to maximize their utility. Honestly, it doesn't seem like corporations, let alone individuals, have enough know how to behave the way much of economics expects them to.

In a sense, this transforms economics from a logical science to one that deals more with psychology.

I highly recommend this book if you haven't read it yet.

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