Home > Work > Animal Spirits: How Human Psychology Drives the Economy, and Why It Matters for Global Capitalism

Animal Spirits: How Human Psychology Drives the Economy, and Why It Matters for Global Capitalism QUOTES

Animal Spirits: How Human Psychology Drives the Economy, and Why It Matters for Global Capitalism QUOTES

1 " The thought experiment of Adam Smith correctly takes into account the fact that people rationally pursue their economic interests. Of course they do. But this thought experiment fails to take into account the extent to which people are also guided by noneconomic motivations. And it fails to take into account the extent to which they are irrational or misguided. It ignores the animal spirits. "

― George A. Akerlof , Animal Spirits: How Human Psychology Drives the Economy, and Why It Matters for Global Capitalism

2 " We have shown that a great deal of what makes people happy is living up to what they think they should be doing. "

― George A. Akerlof , Animal Spirits: How Human Psychology Drives the Economy, and Why It Matters for Global Capitalism

3 " This gives African Americans a view of solidarity among themselves. It "

― George A. Akerlof , Animal Spirits: How Human Psychology Drives the Economy, and Why It Matters for Global Capitalism

4 " The fundamentals of the economy remain strong.' That cliche is repeated by authorities as they try to restore public confidence after every major stock market decline. They have the opportunity to say this because just about every major stock market decline appears inexplicable if one looks only at the factors that logically ought to influence stock markets. It is practically always the stock market that has changed; indeed the fundamentals haven't.

How do we know that these changes could not be generated by fundamentals? If prices reflect fundamentals, they do so because those fundamentals are useful in forecasting future stock payoffs. In theory the stock prices are the predictors of the discounted value of those future income streams, in the form of future dividends or future earnings. But stock prices are much too variable. They are even much more variable than those discounted streams of dividends (or earnings) that they are trying to predict. "

― George A. Akerlof , Animal Spirits: How Human Psychology Drives the Economy, and Why It Matters for Global Capitalism

5 " confident prediction is one that projects the future to be rosy; an unconfident prediction projects the future as bleak. "

― George A. Akerlof , Animal Spirits: How Human Psychology Drives the Economy, and Why It Matters for Global Capitalism

6 " Yet we are currently not really in a crisis for capitalism. We must merely recognize that capitalism must live within certain rules. Indeed our whole view of the economy, with all of those animal spirits, indicates why the government must set those rules. It may be true that in the classical model there is full employment. But in our view the waves of optimism and pessimism cause large-scale changes in aggregate demand. Since wages are determined largely by considerations of fairness, these changes in demand translate not into shifts in wages and prices but into shifts in employment. When demand goes down, unemployment rises. It is the role of the government to mute those changes. "

― George A. Akerlof , Animal Spirits: How Human Psychology Drives the Economy, and Why It Matters for Global Capitalism

7 " Low confidence has caused credit markets to freeze up. Lenders do not trust that they will be paid back. Under the circumstances those who want to spend find it difficult to obtain the credit they need; those who supply the goods find it difficult to obtain the working capital they need. As a result the usual fiscal multipliers, from increased government expenditures or from decreased taxes, will be smaller—probably much smaller. "

― George A. Akerlof , Animal Spirits: How Human Psychology Drives the Economy, and Why It Matters for Global Capitalism

8 " We have to reinvent our capitalist economy, reestablish a genuine creative business spirit in people’s minds, and support their attitudes via institutions that really work and satisfy their definition of justice. "

― George A. Akerlof , Animal Spirits: How Human Psychology Drives the Economy, and Why It Matters for Global Capitalism