tv Robert Shiller Narrative Economics CSPAN November 11, 2019 7:00pm-8:02pm EST
thank news are actually old concepts. maybe i can ask anyone here, are you a classic scholar. how did he translate news into latin. i don't expect anyone to know that. does anyone know this. you are not old enough. [laughter] the latin word is rumor. it is the same meaning as today. these to beat worried about rumors in those days so they can make or break you. so has brought new in my scope of history way back.
so i'm interested in understanding economics events. like what causes a boom like what causes a boom or a session with some countries seem to be prosperous and others not. that is the wealth of the nati nation. i am taking what i say is and in usual perspective on it. that thinking that these events happen not because of some exogenous, if it like sunspots. but be because of talk. most of you are not economists right. when i said sunspots, there is a famous article in the late 19th century, by william stanley devens. he was a british economist who said that he finally figured out, what drives the world economy. why do they have these bus the span over the whole world. and he said has to be something that clippers the whole world.
and then he thought of the sun. because the sun goes through his periodic storms, generating sunspots. in the solar is lower. so that's it, submissions sunshine sometimes in agriculture fails and then drags everyone down with it. but it turns out that he was wrong. you can't actually, the data don't match up with that. the solar output isn't that variable. so what is it. you are talking right now about it and discussion, that will cover the whole world. why would that happen. there are all of these countries and thousands of miles apart, there might be some good economic reasons for it. i am thinking that a lot of it is due to talk. and something going viral.
even in olden times, people talk. they've always talk. it is human nature to talk. anthropologists who study human universals. in one absolute universal that is absolutely every human society that is that they talk. and secondly, they love to gossip and they love human interest stories. but they don't do note the draw diagrams like economists do. generally they don't. so i'm thinking it must be met. and i'm thinking that big changes in the world economy, take place because of new and different stories. so i coined the term narrative economics for my presidential address. i gave it before the economic association in 2017. and i called it narrative economics. i presented to an audience of 900 economists.
and i was faintly careful of the profession, right to the profession of their annual meeting. i said, why is it that we don't study the stories that people are telling. the stories that go viral. it is just not an art tool bag. and i was afraid i get booed. they don't generally move people. but nobody bowed and they applauded the end of my talk. so that enabled me to write a whole book about it. so the term narrative economics actually does go back over 100 years. it used to mean, economic history, you would tell stories and the chronologies about really a financial crisis. he was a first this banquet on epic weather. an argument started to do this with that. and it's just a sequence of events. and that's not what, i mean. narrative economics is the study of popular narratives. we do is try to get into people news thinking.
people don't tell you what their economic model is. have you ever had a dinner conversation we discussed economic models. probably not. >> so, we need to be realistic about what forces changed to people news thinking. economists have a habit of assuming that people are rational. on the right again with the economist they would be rational. also consistent, three-time and not subject to any fads or phases in a new idea. i say we have to move past that. so narrative economics is about people news stories. in another reason why economists don't like to talk about it is it is kind of embarrassing. so the stories don't sound very intellectual. they're all real people and some of them are intellectuals of the art.
we have to look at the stories that are contagious. that means go viral. and we do see go viral, that is a disease analogy. i have been giving talks in washington this week about this book. i have to cut it back a little bit. scholarly, so the key idea that i guess is essential to this book is to say about epidemiology. i also like to say about other, academic disciplines are is it too compartmentalized. and we are often in graduate school where i teach at yell, ready graduate school, you are preparing to students. you say that's your most important mission is to prepare
them to play the game as an economist. see focusing on research methods. they are teaching a course in economic history which is becoming rare these days, but if you are, you will probably juice it up with a lot of econ metrics in statistical analysis because that will help them on the dissertation. and then you just lose sight, there is never time to read psychology or sociology or we've god for bed, epidemiology. what is that. we don't teach that. but looking at the basic epidemic model in medical schools the medical students learn. there is a mathematical epidemiology and it this literature is about 100 years old. it is developed quite a bit. but i will see the key idea, i am oversimplifying if it but any disease, has a contagion rate. and as the rate of growth of the
infected population. but there is also a recovery rate. removal rate. people get over the disease. or they die. but let's be positive and see to get over the disease. there are immune from it. so in order for an epidemic to get started, it has to have a contagion rate above the recovery rate. so epidemic the kind of mysterious and medicine. you see an epidemic, just suddenly seems to come out of nowhere. in western epidemic in this town. and not in the neighboring town. and while the epidemiologist, with research that. and if i see will there's something different about this town in the contagion rate has gone up. and maybe they have changed some of their behaviors or they are together bark or something like that. so they will be more contagion it will be faster and will tip it up above the recovery rate and you see an explosion of the
disease in the town. and then mysteriously it will change. it will go down. usually you don't know exactly what people are doing that is different that made it more contagious. and so, that's a lesson that i am trying to explore and now looking at diseases but looking at narratives. and the idea is that some narratives are very contagious and some are not. for kind of literary reasons, you have in this bookstore, books by many talented writers. it is hard for us to know how they know it. some books are best sellers and how would you know and how can you predict that. there are people who have tried to computerize and identify the sellers. as a book out recently, called the bestseller code that predicts, you can give it a test of a book and it will be a
prediction that will become a bestseller. i don't say that field is very far advanced. there is some human element that's going to be a long time before computers can capture that. there's something in the creative genius of some people. so give one example from my book. it is in all example but i like it because it is precedes the computers. this is the example of the laugher occurred. have any of you kindness are in the spring i get recognition. it means contagion. did you learn it in a graduate poet program in economics. i'm sorry to do this. [inaudible conversation] >> okay all right, we have a four distinguished audience the new. he said he was on reagan. congress. he ran the computer model.
connect the reagan stacked cut. [laughter] and have formulated that. [inaudible conversation] >> he heard in the news. okay, so some of you younger people might not know. but i will tell you the story. part leffler had dinner 1974 with donald rumsfeld who was secretary of defense, and cheney was later to be vice president of the united states. an art, he was an economist and also a wall street journal writer, was there. laugher pulled out apparently polenta napkin, and drew a diagram illustrating why it is that we might expect, if we cut taxes stacked revenue will actually go up. it is story. why the world does that go
viral. okay because it is partly because it would help justify stacked codes. i say it takes more than that. is that an original idea that cutting taxes might raise revenue. while i can quote him and says, no it was not an original idea. in fact art represent as all of way back to the economists in chaldean, who wrote in his economics letter to the 14th century. that can happen cutting stacked rates can sometimes raise revenue. i say it's absolutely right. it can happen. only known it for hate hundred years [laughter], 1900 but quite a long time. what is the go viral i say the viral nature of the story has something to do with visual imagery in the napkin some outfits and and it was raining,
on rhetoric, do you know the roman senator. here is this about 2000 years ago. he says that. through the speeches fill them with visual imagery because people remember the member. some visual imagery, and it sort of has a story quality. it doesn't exist. but it used to be a nice restaurant in washington dc. and so somehow, when he figured out that it was a good story. it was his individual genius. and he told well. in his book. it came out of the same time as rubik news cube. do you remember that. that is not an economic narrative. but it was a narrative. rubbing sku went viral. it depends on the source art was
a life changer and came out with a book and recording and he was a celebrity from that one narrative and then, this is the nice part of the story, the national museum of american history right here in washington was developing a special exhibit in business history and somebody there thought i wonder if we can get that napkin. does anyone still have it. and so the gentleman had passed away many years later but his wife is alive and huma look among his things and we aren't looking for a napkin with a drawing on it and so she then withdrew his things and she found, lo and behold there was a cloth napkin with a diagram on it. and she called amusing bags and i have it. you can now see it, is going to go to the museum today but it
didn't have time. but i want to see is visible and it is on their website and they are very proud of it and there's only one problem. eric porter called art and asked bump up it. and he said, i don't believe it. and the guy simply what you mean you nobly that it was you who did it. and he said my mother taught me never to write on nice things like a cloth napkin and fancy restaurant. to make you wouldn't do that either right. [laughter] if he had a restaurant, would you write on the cloth napkins. it just seems like no good person would do that. but a strong narrative doesn't have to be true. [laughter] was apparently, oh by the way, if you want to watch it, somebody got art and cheney and donald rumsfeld together to reenact the very dinner and then you can see it.
but i say this had economic impact. it helped elect ronald reagan and before that, i say it probably helped elect, she was elected but margaret thatcher of the uk, was appointed, how do you see it. it penetrated english language countries. this narrative did. i looked it up in france. i looked for, i know how to see it, but it did get attention speaking french. did i see that right. so it had a little epidemic in france but the next thing they did, was to elect france the first socialist president of france. so the narratives have a patriotic element and i haven't element of identity. you may sign her life and to some story that has a patriotic
american, you did to repeat stories about americans or at least other close countries like australia. and so i say that that is where where things go. so i have so much more, let me just talk about two things. one is home prices. the other is the great depression. we are just coming out from the great recession, which is named after the great depression. so is very much on our minds. so it would shy differs. let me start with home prices. through a huge boom in home prices. in the united states and also in the uk and other english-speaking countries particularly in the early 2000 news. and the moon started to falter around 2005, and reach a peak in 2006 and then it's faded away.
and were leaving in the aftermath of that. so what caused that. one thing i can do now with digitized text as i can search for phrases in seo, and they were. i've been interested in this a long time so my research is back many years on this. i look for the term housing bubble. almost nobody says housing bubble in 2003 or 2002. that is suddenly sued. i already get google searches in the trend which allows you to account google searches sars in 2004. so you see this big spike up in 2005 and a 2006 where it everyone surfing his for the term housing bubble. another thing that i found doing various digital searches, is the term leaving houses.
sadly came up at the time. typically it was used derisively, it like you are putting into this housing bubble. typing houses means buying a house and la it just a few months later at a huge profit. but the narratives were going around at that time, that flipping houses was highly profitable. and there is just excitement and maybe can remember it. only a few years ago, i used to listen to cabdrivers. it can draw them out. they always come around to home prices before long. i would listen in restaurants and i would hear home prices. sometimes. and i usually did. so it seemed like everyone was talking about it. and then you became embarrassed. because they thought that they mayday big mistake never just foolishly, been a bubble. it was a sort of, some books written about how to flip houses. and you had, and aftermath, i
say donald trump talks about a little bit. he wrote many motivational books are presented. among them, motivational about how to make a lot of her name no sacredness what he does. and help promote his career as well. the other one i wanted to talk about briefly is the great depression. there was a stock market crash in 1929, and after that there was an economic depression until world war ii. a decade, the decade-long thing, is the legend today. the legend of the great depression came back, i can tell you that i did searches and it came back violently in 2008.
and we have named it the great recession because everyone was thinking, is this the great depression again. there was a national panic because people still remembered the narrative. it faded a lot but it was in the back. it was like an infectious disease in epidemic, and a stop bothering very many people so they're not really concerned about it but then something will change and it becomes contagious maybe it is a mutation in the disease or new variation of the narrative and then it comes back. but what else, does it in the hills have a story of the great depression. i wonder if i can elicit from one of you. franklin dunbar roosevelt mayday famous in his inaugural address in 1933, he explained what we have to worry about. [inaudible conversation] >> i heard that from someone else to. that is so famous, and the only
thing we have to fear, is fair in itself. at the great depression is the confidence thing. always the other people and we say that they are psychologically depressed. lucky incompetent so i pulled back to parade it is a contagion. theories. as one of mine sort of. by the way, i.out in the book franklin rosalinda was not the original there. maybe he sent it to. i don't know. it was mayor carly news assistant in austin said exactly that. malic mayor carly, who is he. it just wasn't a good story. when roosevelt said it was suddenly a good story. yell professor irving fisher, said it around the beginning of the depression. way before 1933 so we write
stories about celebrities. we like stories that have certain things like inauguration. on the way if you are watch 1933 the year of roosevelt just search for it on youtube. it was all filled beautifully done, you can see it. he has more of a magisterial and futuristic voice in our current president. [laughter] but he was a good speaker. all of you with one thought. i say it's important. there were other causes of the great depression. and i say one of them which was talked about a lot in the great depression, but we don't associate it was that robots are coming to replace jobs. and people are going to be permanently unemployed which means with these robots. you may see wait a minute, over the tagamet were they talking about robots in 1930s.
you bet they were. the term robot came from a play. charlie chaplin had a nice movie about that called modern times. you should watch it, it is a great movie. it's about charlie chaplin was working in a factory. it was automated in the sense that it had conveyor belts. he had to work, he had do the same task and it is really funny. it droving crazy. i am thinking that that story that was happening the great depression was repeated many times in the great depression
that they see this is the power edge. we have machines now with so much horsepower. they outnumber a few months by a thousand to one. a thousand horses, for every human. so how can people stay employed. that was on their minds. in the industry my book is about the dial telephone. it used to be and you probably know how to operate the telephones back then. and that all telephones from before in the 30s, you pick it up, and is the direct connection to the operator. and usually was a she she would come out and see, number please. you would repeat the number and she was on the switchboard and she would connect you. but they came out with dial telephones. those were called robots because they were doing the job of this operator who is now being thrown out of employment. in the installed dial telephones in the u.s. senate in the early 1930s and when senator got so angry and upset, he said i'm not
going to do the work for the telephone company. and had them thrown out. it is a difference between, they were wrong about the power edge. because after the depression, we came right back from employment. it wasn't like he was a major technological change that was going to create an army of endpoints forever and it was the fear of that so that caused or contributed to the severity of the depression. so in my mind i say we are at risk of this again. because we are going through a resurgence of this technological unemployment is the, then. narrative. i have a different name for it. we call it artificial intelligence. i say that we've never been through this before. and i'm noticing that it won't be, or maybe this time it will be a disaster, not going to try to answered that question. but hasn't in the past. but it has scared people in the
past. so i say we are in a somewhat dangerous situation but if unemployment increases, we will see a rise in fears and may be a more severe than usual recessi recession. so i've stop with that. and we can open it up for questions. [applause] >> good evening my first question is about rachel krahn,. >> rachel grant. >> did you mention in the thinking, you started to talk about that in terms of patriotism in the u.s. versus france and why these ideas became viral. so in terms of the global economy and the ideas about ai, honey think different ideas are
going to have different epidemiological models. what identity you have. soon i should mention that book. here in washington, georgetown university and a great friend of mine. we've written two books together. so should see this book is also partly his inspiration. he wrote a book with rachel present called identity economics. i say it is really nice. it emphasizes that one has a sense of importance. we all have a sense of our own importance. even slaves had a sense of that. the way, i just on the harriet tubman movie that is coming out and i recommend it. it is what it's like to be a slave in the american south. and how some of them were spirited and try to get away from it.
but everyone has a hero story. some sort of another behind themselves. we live story. but it explains economic events. in the prejudice against women among men in the difficulty they had various times getting it set accepted in the workplace. because why do men resist it. it is because it challenges their story about their own uniqueness. and that is a great one. maybe you have a here. [laughter] i don't know if i answered your question. [inaudible conversation] i was just thinking as your identity determining that logical model and how that will play out in the contagion of the viral story. >> people write stories about their own social group. i have an example in my book, and the story of a george
washington and the cherry tree. anyone heard the story. [laughter] you have it. and one person shaking his head no. bully will tell you the story. george washington was howled, 12 years old. i actually read the earliest version of this so i have it correct. he got a birthday present. sorry didn't see birthday present. they never did that. he got a present of a small hatchet. as like any normal boy, he went around looking for things to chop. and he damaged a prized cherry tree and killed it. or essentially killed it. and that his father was furious. and he goes to george and says, did you damage or did you kill the cherry tree. and george answered, i cannot tell a live. i did it.
>> why is it such a great story. and he came back to 1802, at a book by parson dreams. do you have that here. [laughter] it tells a story. it's almost a first-hand account he got it from the elderly woman years later who grew up with george washington. so i suspected is the true story. why is it a contagious story. i don't know. you to me. why is it contagious the parson weeks was another good writer. it is filled with stories about george washington. and that was his most successf successful. i say we have to become more humanitarian in our economics department to understand why people fall victim to certain stories. maybe i should move onto the next question. >> have two questions. the first one, have you studied
micro economics overtime. the time of the great or the romans, where they how did they propagate. >> my way of setting narratives is to read cicero. and i found another wonderful essay. it is by in the second century, is the cynic. that's also an ancient word. the cynics were skeptics of the time. so the sun has an essay called a professor of public speaking. this was in which he describes his advice to young would-be speakers. i won't make comparisons with people today but it sounds so familiar. betty was making a joke of it.
but i say it was reality that people who work public speakers would try to engage the audience. let's look at that audience and get and engage them with their identities. not worry is it too much about the facts. they said story about the facts. so this is ascetic. in a professor would tell you this. don't worry about the facts is it too much. because you gonna tell a good story. i recommend, i don't know if you have that book hereto. [laughter] >> thank you. as an economist, economics have become so mathematical and full of competing models. do you foresee incorporating any of this in models or should we leave the models behind. >> the appendix of this book contains mathematics. i don't want to scare you off.
i put in the appendix because i thought it does scare some people. so don't read the appendix. you can write if you want to. but, i am thinking that the standard model of the economic fluctuations, i'm getting academic year. it has built in based on the idea of the multipliers. multiple rounds of expenditure and it would see that the way to get out of a recession, is to raise government miniature above the deficit spending that will create incomes from the people we do hire people to do things with your her name. that creates income for them and so that is the second round. and then that will create incomes for more people and they will spend. so it is a feedback loop that you start by stimulating deficit spending fiscal policy. that is all fine but it's only part of the story. so i want to broaden that model and put in some of these models
comes from mathematical ep dump epidemiologist. to further enrich the dynamics. i say there's an assumption that it doesn't matter what the president says. this is the real her name flows that matters. but i say it matters a lot with the president says. when the chairman of the federal reserve. these people have enormous influence in the stories to tell. they make a huge difference. >> thank you. i'm a short question. you see that the economy still talk about the narratives. it seems like to me that the economists talk about narratives all of the time. they just call them information or and beliefs. for example or values in social economics.
one of the things you write in books, some of them looked to me like they are place for example, are the people and some other things to be like it looks like values. so my question is, what at its value of the american perspectives over very different objects and very difficult and very different properties. >> okay this is the grand question. game theory is an important part of the theory. i know they talk about economists also talk about non- uniqueness. in equilibrium and the turnabout is people believe one thing but want to live another. for example, the idea that the diamond model that bank failures says banking system is the staple equilibrium that it can
be changed and suddenly by changes in expectations. so we can build that. and not staying or i'm not trying replace all of economics. i'm thinking we have to go to the next step and make it more realistic so why do we have banking panics. and what are the narratives. in my book i talked for example, this is a diamond thing but it is embellishing them with more. >> i search for financial panic, the term. going back to the 17 hundreds, for the term panic of some year. like the panic of 1893. i don't see anything before 1750. also you see anything about the stock market crash. but there was a big bubble the 1720s. so they had that warm bubble. but it was fading. it was a prominent until the
mid- 19th century soviet panic of 1837. the fact that they didn't use the word panic to describe it. then there was the panic of 1857 that the panic of 1873. there is panic of 1893. there is a panic of 19 oh seven. that is when we found that the federal reserve which was supposed for all time stock financial panic. people believed that for a while. but i found that all of these were part of a constellation of narratives. nobody talked about the panic of 1837 in 1837. but they started talking about it in 195720 years later. and they talked it anymore about in 1873. thus decades later. so they were all going together. so they say about it, what is of a crime. macron happens when people start talking about a bank as potentially dissolve it.
so you meeting somebody in the street and into here about the eagle bank. i mentioned the bank, they lost their entire debt endowment. at the eagle bank. in the 19th century. aren't you here of northern rock. it's going to go on. just go look at it and go over there. there is a big crowd out from the night trying to get in. to get the her name out. so you panic and he tried to pull all of your her name out. when the bank can't, no bank can withstand that because they only have so much reserve on hand to pay out right now. after they called the loans, it is a slow process of the whole thing, but that can happen only if there is a narrative that awakens them to the possibility. and it has to do fast enough and it is actually contagious. so i am thinking every have to know how it is that they got into that might set in what we forgot about thinking and we didn't clearly forget about it. there's like an academic
background disease. his great low loophole that went out we took care of it until 2007 and it all came back. those old narratives suddenly became contagious again. so i am thinking that diamond, who seems and like others like them, are doing something. parted with economics. i want to it. to some sense about where these beliefs and ideas and what are their dynamics. >> you mentioned something in the beginning about persistent narratives. like people presenting about the truth. they prefer, the original story in her head. i was curious if in your research was anything that came about how we are wired to perhaps not really see the objective truth that we are wired more for the truth that
will sustain us and perpetuate the society that we are leaving in. >> one thing that is revolution revolution live see is neurology. i believe we are wired for narratives. i associate in the book a song, we are wired for songs as well. while we have that. the other colleges see that every society has music. every society has stories and stables. and there was a famous experiment in the 1950s in which a researcher unlike droids in the human brain and awake person, and that might be considered unethical with that kind of research today. but let me just try staying the
result. add a personal way, with local anesthetics and they had a hole in her head. and they were pushing an electrode around and would give them a jolt of electricity. and they found that in certain spots in the brain of the person with suddenly, with a jolt would simply react. he would ask, what are you reacting to. and she would see, i hear music. stinson with the radio on. >> and they discovered that she would hear a song that she knew well when they started the lacroix and the thing would start at the beginning. if they interrupt the electricity and they do it again, start over again from the beginning. sunday is the sequence but other parts of the brain, we do and fired the electrodes, she did was see, oh, i am thinking of the story and you would see what is the story.
she was ao my mother is telling me this and in his oh my good news a long story. but you have stories in your brain and you are organized that way. so they are naturally contagious. and even music, and language are intertwined. a lot of songs have stories to them. when the homeowner, red, while he wouldn't read it. he sang it when he would read it he was staying it not read it. music and stories are intertwined. in basic to the human brain. i see that people intuitively say about economics. they connected with stories. see what it expense story, you want to do something what are dead. in genesee to jute did. he said one of his great regrets in life he should call it the
nitschke curve. [laughter] >> in any if it, it's just as well that is called the laugh occur. to make your making a joke. it's been. >> i am a physician. so i learned epidemiology. it doesn't quite work that way. usually in a something causes a, some physical thing, causes an illness. in the very first epidemiological study was of from a well,. >> i know the story. >> but have always wondered about economics to try to make it scientific thing out which
involves a human component that has brought as easy to identify as a virus or a bacteria. so for example, inflations have always been based on expectations and the whole idea in 1979, was to break the back of inflation by bringing down interest rates that would get the idea and a people news minds so there would be more expensive some by nature so will buy it this year. expectation and economics can't be based just on math or physical findings like medicine. there is a human component that is very hard to integrate in a lot of economically things based on the rational theory and then it turns out that people don't say like the rational man. people are irrational and it is
hard to make a mathematical or meal off of that. >> i see is the half-truth. people are often rational. our society works well because there are rational thinkers around us. but we are also so often irrational. that's why i want to be more inclusive of different approaches. when we talk about policies, we can't use eight in a row model, we have to say broadly. >> okay thank you. >> hi. it seems like one prominent narrative problem. i guess it's been around now for a number of years is that the federal reserve controls interest rates. all interest rates. to what extent do they actually control interest rates and to what extent is it because of a number and of that idea. >> actually wrote a paper in 1978, called real interest rates.
my answered was, well maybe in some sense probably, they target the federal funds rate. it is an overnight rate. a very short term. the dave but the longer rate, trip. when the puzzle right now around the world, hung rates are very low. like the ten year treasuries run one half percent. this in real terms, it is zero. we have zero interest rate you wrote it is even worse. in a 30 year bond rate is like a minus half of a percent. not so post to go below zero. why would you let her name and then asked somebody to pay back less than what you get them. you could just give the her name. so there is something oddly behavioral going on right now it is some sort of investor inertia our cost of doing business a different way. it is also, and this is something i am working on, it is
the beginning of a research project, not just for me. i am thinking it will be everybody. a lot of people not everybody but it people are in the kind are starting to notice the data that we have about people news narratives. and they're starting to pay attention to it. but i don't have it all worked out yet. why interest rates are so low, there are lots of theories about it. it is an interesting thing to see. i'm thinking narratives probably play a role in that if it. >> okay. thank you. >> thank you robert, i just want to jump in and see we have time afford to our questions. >> hi and thanks so much for coming. i have a question and i don't mean to sound crass what it feels like it's quite obvious to me. i want to learn more about how things like word-of-mouth, in
fact are incorporated alike into economic models and computer modeling today. i don't know much about this b but,. >> are unique on major preincident and working on undergrad thesis was on textual analysis of, and the media versus oil prices. i am thinking of so many things from my world we are, of course she would build word-of-mouth and facts into an economic model. >> i missed the first thing in my prepared talk. namely that of all the social tight sciences, economics and finance are the worst the incorporating narratives. so that's hard look. is to listen to these other people like you, it is really not talked about. there are some in its
increasing. our attention to narratives is the creasing in all of the social sciences as i document. it seemed obvious to me since i wasn't undergrad undergrad at the university of michigan. a talk about that. and history course he was talking about narratives. i thought well i don't hear hear about this in my own department. bangmac so how is this incorporated today. you see it's really not even though it should be. >> the team to trace the causes of things to the federal reserve or government regulations. things like that and they feel that that is her job and it is done. not going to get up in front of an audience generally. delta sometimes and they're not going to get up and see, you know i heard from the taxi driver, such and such a theory. and people are staying this. in the don't do research on
this. but we do have the confidence indexes and it came in and liked 1930s with george callas. let's create a measure of confidence from a survey. if those guys had always been sacred tiered people in the econ department. we don't really believe in that. university of michigan does a consumer index. in the conference board does a consumer confidence index. but it's academically researchers are not into that. they just don't like the sound of it. they do a little bit. it is there. there is a problem that we have something in the economics that's called physics envy. [laughter] a lot of the people starting out, i myself wanted to be a physicist or mathematician when i was in high school. but we are not.
one of the most famous economists around 19 hundreds, economics has brought an exact science. because it is about the higher order of decisions that people make. actually making the real world. and it involves their intentions and their seekers and manipulations, and just can't be exact. and it i want to make it more of a science fight, and i am thinking that we are going to see in coming decades the revolution in economics like revolution of the 1930s. that came along with new data on gdp unemployment rates, and the like. we've been talking about those data sets. not now collected by the government for over 70 years. now we've got something different. now the economics of the young people in economics are not so focused on gdp anymore. they get data from companies
rather than the government. the government doesn't directed narratives data. it just doesn't sound right but it's not there and is collected by private sources. >> thank you. >> hi. so i work in biotechnology. infectious diseases so i it's been my entire life on this. it's going to study but i thought i need it to do something entered disciplinary psychic economic. like that. i was annoyed my professors because i was more focused on practical application than theory. swarthmore college. i'm a total nerd. >> did you get a certain teacher. >> i don't remember. so i have a question.
the big generalist. so i would love your practical recommendations on how to delay or avoid this impending recession that we all speak up. and can we use narratives as a tool to actually achieve that. >> i don't have the most concrete advice. i pitch this book at the beginning of 30 years of research by other economists okay. >> [laughter] >> so i can see that we are saved from a depression partly adjournment of the federal reserve board in 2007, and 2008, when the crisis came. he wrote a book about the great depression who had real-world knowledge and who had the idea that we can't let this narrative get going. i talked to about this. any doesn't want to put it in these terms exactly but why did
they immediately bail out some firms, and they lift it to collapse but other firms did bailouts. it helps detect them. he was definitely motivated by the fear and fear itself. the confidence narrative. it's not the core curriculum in the economics department in four years, at yale in the phd program, we had comprehensive exams that the students take after their courses and they have to passout when they flunk out. so they are very worried about it. so i saw myself teaching the ground to its students to that exam. he's wanted to to get through the exam. but if i ever talk about narratives or something like that, just doesn't sound right.
since all of these mathematical models they had them doing. i don't say they were wrong and they all have some value. but we have to move beyond them when especially when it comes to forecasting because that is describing what is changing. and often what is is in people news minds. . . . >> for 40 years c-span has been providing america unfiltered coverage of congress, the white house, the supreme court in public policy events from washington dc and around the country. you can make up your own mind,
created by cable in 1979, c-span is brought to you by your local cable or satellite provider. c-span, your unfiltered view of government. >> representative beth clark is a democrat from new york and she is vice chair of the energy and commerce committee and she is also cochair of the smart cities caucus and is our guest this week on "the communicators". congresswoman clark, thank you for being here. >> great to be with you. >> i want to start with that smart cities caucus, what is it and how do you envision smart city? >> we decided to establish a bipartisan smart city --