That's the world we live in: when it comes to economics, people have emotions; it's not like chemistry or physics.
Interpretation
Economics is influenced by human emotions, unlike the natural sciences which are more objective.
This quote by Robert J. Shiller emphasizes the unique nature of economics as a social science. While fields like chemistry and physics rely on objective laws and principles, economics is deeply intertwined with human emotions and behaviors, which can lead to unpredictable outcomes and decisions. Understanding economics requires recognizing the emotional factors at play in people's choices and market dynamics.
In practice
During a lecture on market dynamics, this quote could illustrate the importance of psychological factors.
Those on the downside of rising economic inequality generally do not want government policies that look like handouts. They typically do not want the government to make the tax system more progressive, to impose punishing taxes on the rich, in order to give the money to them. Redistribution feels demeaning. It feels like being labeled a failure.
Speculative markets have always been vulnerable to illusion. But seeing the folly in markets provides no clear advantage in forecasting outcomes, because changes in the force of the illusion are difficult to predict.
Money management has been a profession involving a lot of fakery - people saying they can beat the market, and they really can't.
We should not be focusing on quick solutions. The really important concern for policymakers everywhere is to prevent disasters - that is, the outlier events that matter the most.
If we wait until income inequality is much more severe, we will have a whole class of new superrich who will probably feel entitled to their wealth and will have the means to defend their interest. That's already gone far enough. We shouldn't let it become more extreme.
I think that a lot of people in all walks of life have the impression, of course, that, 'I specialize in something. I can't - I don't have the time to read other things. I'll just go to pure entertainment when I'm relaxing, and then I'll come back to my pure specialty.' That produces - that attitude produces idiot savants, unfortunately.
Industry entirely left to itself, would soon fall to ruin, and a nation letting everything alone would commit suicide.
No bank should be too big or too complex to fail, but almost any bank is too big to liquidate quickly, particularly in the midst of a crisis.
I will cut taxes - cut taxes - for 95 percent of all working families, because, in an economy like this, the last thing we should do is raise taxes on the middle class.
If farming were to be organised like the stock market, a farmer would sell his farm in the morning when it was raining, only to buy it back in the afternoon when the sun came out.
If you're totally illiterate and living on one dollar a day, the benefits of globalization never come to you.
Money is different from all other commodities: other things being equal, more shoes, or more discoveries of oil or copper benefit society, since they help alleviate natural scarcity. But once a commodity is established as a money on the market, no more money at all is needed. Since the only use of money is for exchange and reckoning, more dollars or pounds or marks in circulation cannot confer a social benefit: they will simply dilute the exchange value of every existing dollar or pound or mark.
Subscribe for the occasional hand-picked quote. No noise.