Akerlof, George A. Animal spirits: how human psychology drives the
economy, and why it matters for global capitalism, by George A.
Akerlof and Robert J. Shiller. Princeton, 2009. 230p bibl index afp
ISBN 9780691142333, $24.95
Behavioral economics--the intersection of psychology and economics, and
a frontier research field for those two disciplines--introduces human
frailties and proclivities (such as inconsistency and feelings about
fairness) to microeconomic decision making. In Animal Spirits, a term
borrowed from the writings of John Maynard Keynes, Akerloff (Univ. of
California, Berkeley) and Shiller (Yale Univ.), well-known and
respected economists, apply behavioral economics to macroeconomic
problems such as business cycles, recessions, and instabilities in
financial markets. The chapters in part one treat concepts such as
confidence, fairness, and money illusion; part two presents eight
questions--and the authors' answers. Far too often they use straw men
to create Hatfield-and-McCoy-type duels between classical economics and
the newer behavioral forays. But the book is obviously a timely,
valuable complement to the more traditional approaches to macroeconomic
thought and teaching. Forty pages of footnotes and references in a
volume of only 180 pages of prose will dampen interest among
intelligent lay readers; however, the book's target audience is
academics. Chapter 13 on the special case of African American poverty
is a superficial and likely erroneous sop to their political leanings
and should have been omitted. See related, Behavioral Economics and
Its Applications (CH, Sep'07, 45-0372). Summing Up: Recommended.
General readers, upper-division undergraduates, and above. -- A. R.
Sanderson, University of Chicago