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on 4 January 2013
If you are trying to get into understanding the problems of Macro-economics then this is an interesting read and it presents a novel approach, but it was a bit shallow and repetitive for me. I guess you don't have to read the whole thing to get the message, 'economics fails because economists assume human beings are rational'. But if you do decide to skip, after reading the first few chapters, be sure drop back in for the last chapter which is pretty solid. It is a relatively easy read and worth a few hours I think.
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on 13 March 2014
Though animal spirits, as pioneered by Keynes, is a very interesting concept, I found that this book does not really add anything meaningful to the conversation as far as ordinary people are concerned. Nevertheless I would recommend this book to those wishing to get into the spirit of understanding how markets reflect human behaviour.
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on 9 November 2014
Easy straight forward quick read which cogently put's across it's case for the role of behaviour and variance in the economics... it's all a bit common sense really but i guess that's the point .... when the money and £ signs are flowing in the good times good sense goes out of the window!
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Against the background of current financial theory, Animal Spirits reminds us that human instinctual reactions have been underestimated in the domain of finance (as they have in other facets of human behaviour).

That the global economy has become unstable is clear; this book is a revelation in understanding why that happened.

This insightful book is a must read in the effort to understand what is going on today in the global economy, and what measures could be effective in stabilizing it.

I heartily recommend it!
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on 18 July 2011
The book is of reasonably good quality. Robert Shiller,as a new Keynesian economist devoting long-academic career into the area market efficiency and so forth,does have insights in this ongoing financial crisis. The serious questions the author threw are absolutely legitimate and worthwhile reading yet the according solutions tend to be arguable. This however by no means comprimise the worthiness of the whole book, especially to those interested in identifying the orgins and probems out of the this crisis.
For those wishing to get elementary introductions on bahavorial economics or finance, which is the cutting-edge science in economics, with real examples, this would be a good choice; for those looking for in-depth analysis and theories, Prof. Shiller's Irrational Exuberance would be a better choice.
Last point is this book, unlike Prof Friedman's Capitalism or Freedom or Free to Choose, is not intended to address a systematic review or illustration on behavorial science or (new) Keynesian's approach if people expect they exist.
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on 16 June 2009
The authors play out the main themes that led to the current crises: housing bubble and sub-prime mortgages, over-leveraging, hedge funds and animal spirits that fueled excesses. They also stress the importance of stories/narratives through which people explain to themselves what is going on in the economy and that contributed to the overshooting of uptrend/downtrend. For instance: how well/bad a friend of a friend is doing in real estate or stock market investments - maybe I should do/avoid it too.

In understanding the system and its flaws, we need to acknowledge the role of animal spirits - how people really behave - first. Only then can we fix it.

So besides educating the book tells you what you probably knew intuitively already: most of the economic models are rubbish and economics is not a science but hocus-pocus.
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on 17 March 2010
I am glad that I read this book, but not for the reasons that I would have expected when I started it. I do not feel particularly enlightened about behavioural economics, but then I am not an economist and I already knew enough that I didn't really need to be. The book is interesting to a non-economist because it gives a good impression of a debate that needs to happen between economists.

The role of psychology in markets should be obvious to any financial professional who has done even a modest amount of thinking and reading. The notion that markets are efficient, and the related idea that they can operate without very much regulation, are so transparently daft to someone who follows the markets day-to-day as to appear straw men. Why then have two distinguished economists written a book to knock them down?

Systematic understanding requires models of the world. Macro-economists have for some years built their models with the assumption that people are motivated by economic considerations and act in their own rational self interest. This approach is not necessarily shown to be valueless by the fact that individuals that we encounter have different motivations and act in a variety of ways; it may be that there is enough truth in the modellers' assumptions as they apply to our aggregate behaviour to allow their models to make reasonably accurate predictions about the economy, and therefore provide useful advice to fiscal and monetary decision-makers.

The point of this book is therefore not to show that individuals are not the ideal economic agents of macroeconomic models, but that the behaviour of human beings, individually and in aggregate, is sufficiently far from that ideal that it cannot be the basis of a sound model. In doing this the authors shed some light, for the non-specialist, on the arguments that economists need to have between themselves in order to improve the field of macroeconomic modelling.

At times I felt that the book was rather wooly, and I have had a stab at understanding why. Akerlof and Shiller quote various pieces of research to back up their views of human nature. But the research still only covers a few people, and it is a leap to generalise its conclusions to aggregate behaviour, even though the generalisations seem to untangle some of the knots that are created by models based on the rational-actor view (it is not established that there will not be greater problems with new models developed from their ideas). The authors are making an appeal to fellow economists to recognise that their existing models are not good enough, arguing that the reason for this is that those models are built on poor assumptions, and suggesting what seems at present to be a plausible alternative set of assumptions to be used in a new model-building effort. An exercise like this is more philosophy than science, and that is why the book feels wooly if you read it expecting the latter: it is a manifesto for a new paradigm, not a new paradigm in itself, because the work of building and testing those new models is yet to be done. After reading the book, I find the appeal persuasive, and hope that the it will be done.
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on 23 January 2010
Prospective purchasers can safely discount the one- and two-star reviews, which are the product of blinkered ideology. What monumental arrogance to discount the opinions of such widely respected commentators/reviewers, not to mention the committee which awarded the relevant Nobel prize (I have yet to hear of a neoliberal economist refusing a Nobel prize on the grounds that the committee didn't know what it was talking about). As Alfred North Whitehead said, "Not ignorance, but ignorance of ignorance is the death of knowledge."
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on 29 July 2009
Animal spirits by Akerlof and Shiller is a very well written book. These highly influental economists describe the current financial turmoil in the light of human psychology. Standard assumptions (such as the rational decisions hypothesis) are abandoned and not without a good reason. They carefully describe why some economic assumptions (in the search for a more scientific approach to the field of study) are false and should be omitted.

Akerlof and Shiller give numerous examples of these false assumptions and try to explain a couple of questions regarding the state of the economy with new assumptions as the starting ground.

The succeeded very well in my opinion. I would recommend this book to anyone who is interest in economics but would like to hear a different opinion on economic theoremas.
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This book presents the concept of animal spirits, which are forces that operate in the economy that influence the way people act and think in the society, notably in an irrational and unpredictible way, which is opposed to the standard economic thinking that people are rational when they make decisions and always weigh their options carefully. These animal spirits are: confidence, fairness, corruption and antisocial behaviour, money illusion and stories. The layout of the book comprises two main parts: Animal Spirits and Eight Questions and Their Answers. Because standard economic thinking does not take into consideration these animal spirits, it has been almost impossible for people to predict this current financial crisis as they represent the missing pieces of information that are needed to answer the puzzling question of why it happened in the first place. The style of the book is mainly academic but it also contains examples from the authors' personal life and experience as well as from different books and articles. It contains a large quantity of statistical information and historical data and each chapter is divided into small issues that are interrelated and form in the end a bigger picture. It is definitely worth a shot!
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