inquiry_from_an_anti_library's review against another edition
adventurous
emotional
hopeful
informative
reflective
fast-paced
2.0
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.
sam1972's review against another edition
2.0
I was never fully clear on what was meant by 'animal spirits'. In the introduction its briefly described as "the thought patterns that animate people’s ideas and feelings", which is unhelpfully vague. Behavioral economics, of which this is said to be a quintessential example, is a supposed to be science. But the definition is so lacking in substance that their theory borders on the unfalsifiable.
Apart from that the book is *okay* for the most part. It falls off a bit towards the end, especially when they start talking about race in terms of stories. They essentially say that 'black people need special treatment because they feel bad, and we need to show favoritism to prove that we're on their side, regardless of the results of such policies.'
They even reject an entire book because it 'focuses too much on statistics' and 'not enough on stories'. But the reason we try to avoid stories in science is that its not a reliable indicator of frequency, and is often biased by the lens of the storyteller. This might be all right if all you're doing is trying to understand what people believe, but they authors go beyond that and assume that its a reliable indicator of actual life experience. The problem is that more than 50% of people believe their lives are harder than average, which is impossible. Similar errors abound in most of our self-reports, and should be used sparingly in science.
Apart from that the book is *okay* for the most part. It falls off a bit towards the end, especially when they start talking about race in terms of stories. They essentially say that 'black people need special treatment because they feel bad, and we need to show favoritism to prove that we're on their side, regardless of the results of such policies.'
They even reject an entire book because it 'focuses too much on statistics' and 'not enough on stories'. But the reason we try to avoid stories in science is that its not a reliable indicator of frequency, and is often biased by the lens of the storyteller. This might be all right if all you're doing is trying to understand what people believe, but they authors go beyond that and assume that its a reliable indicator of actual life experience. The problem is that more than 50% of people believe their lives are harder than average, which is impossible. Similar errors abound in most of our self-reports, and should be used sparingly in science.
christinefongg's review against another edition
3.0
There are a lot of good ideas in this book, but even as someone in finance it was dry and hard to follow. My biggest takeaway was the concept of Money Illusion, and a couple of perspectives the author shared towards the second half of the book.
The book is split in two parts, the first half introduces the components of Animal Spirits and what it constitutes. The latter half is the author's approach to eight questions, "Why do Economies Fall into Depression", "Why Are There People Who Cannot Find a Job", and "Why Is Saving for the Future So Arbitrary?", to name a few. I enjoyed reading most of the ideas, especially the ones focused on real estate and poverty among minorities. It's given me a lot to think about.
My sister, who is not in the industry but interested in the markets, has asked me to leave this book for her after I finish and I intend to do so. However, as the person who willingly picked up an econ book, it's taken me over two months to finish because of its density. There is a decent amount of jargon and financial concepts (Basel I,II/random walk, etc) and I found myself rereading throughout. I'd recommend this to a finance/econ professional but perhaps not to Jane Doe in an unrelated industry exploring her interests in econ - this might scare her away (and quite frankly can find more digestible ways to consume economic concepts).
3.5 stars
The book is split in two parts, the first half introduces the components of Animal Spirits and what it constitutes. The latter half is the author's approach to eight questions, "Why do Economies Fall into Depression", "Why Are There People Who Cannot Find a Job", and "Why Is Saving for the Future So Arbitrary?", to name a few. I enjoyed reading most of the ideas, especially the ones focused on real estate and poverty among minorities. It's given me a lot to think about.
My sister, who is not in the industry but interested in the markets, has asked me to leave this book for her after I finish and I intend to do so. However, as the person who willingly picked up an econ book, it's taken me over two months to finish because of its density. There is a decent amount of jargon and financial concepts (Basel I,II/random walk, etc) and I found myself rereading throughout. I'd recommend this to a finance/econ professional but perhaps not to Jane Doe in an unrelated industry exploring her interests in econ - this might scare her away (and quite frankly can find more digestible ways to consume economic concepts).
3.5 stars
ivaska's review against another edition
4.0
Brilliant book which will give you an idea how the economy have got into the crises and offers and insider's view to underlying reasons and possible outcomes.
tl71's review against another edition
Didn't finish reading it. Too tedious because of the jargon and assumed knowledge. But I could tell it was a good book!
matthew_p's review against another edition
4.0
Mildly dense, but fairly accessible explication of how standard macroeconomic theory can't explain the actual market behavior that's driving our current business cycle. I recommend.
daaan's review against another edition
3.0
Overall, this was good, though imperfect. The opening section on the psychology they equate with Animal Spirits was a little dull, though partly this is because I’ve read books that explain the subject more thoroughly and accessibly, making this reiteration laborious. The second half is much better, though I think it overstates its case. The book also suffers from being written in the teeth of the financial crisis, so its triumphalist claims to understand its exact causes are a little hubristic. I’d argue on the psychology side that it is missing a few key explanatory factors, loss aversion, optimism bias, acclimatisation. On the economics side, it lacks awareness of Richard Koo’s concept of the balance sheet recession and a more nuanced understanding of complexity economics, non-linearity and the disequilibrium they imply. Still the book serves as a valuable brick in the wall of modern economics, I’m just not sure it’s load bearing.