A review by daaan
Animal Spirits: How Human Psychology Drives the Economy, and Why It Matters for Global Capitalism by George A. Akerlof, Robert J. Shiller

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.