Sunday, October 20, 2019

Narrative in economics: Shiller’s stories

I was excited by the title of Robert Shiller’s new book Narrative Economics: How Stories Go Viral and Drive Major Economic Events (2019), but disappointed to find that he defines “narrative” much more widely than the stories I'm looking for, and was hoping to find. Overall, though, I think his meaning is close to my interest in myths: stories spread by word-of-mouth that shape how society imagines itself.

Not surprisingly, even an economist pushing a humanities concept in a math-obsessed field ends up with a rather technical take on the topic. Shiller uses “narrative” as a synonym for concern, phrase, idea, or theory; it often refers to a causal model. Here are some examples taken from a book excerpt in Bloomberg:

Still, it wasn’t until the 19th century, …, that concerns about technology-based unemployment took center stage. The narrative was particularly contagious during …
The phrase ‘technological unemployment’ [i.e. narrative, in his terms] first appeared in 1917, but it started its epidemic upswing in 1928.
These words, …, created a contagion of the idea that a new era of technological unemployment had arrived. 
The ‘labor-saving machines’ narrative was strongly connected to an underconsumption or overproduction theory: …

Another example: Shiller ties his claim that the “narrative of out-of-control unemployment was already starting to go viral before there was any sign of the stock market crash of 1929” to newspaper description of an economist’s theory at the time that “[we] are eliminating jobs through labor-saving methods faster than we are creating them.” In my book that’s an explanation, not a story.

To me, story or narrative has three key elements: character, chronicle, and causality (i.e. who, what, and how-why). I like Mieke Bal’s definition of narrative: an “ensemble of texts, images, spectacles, events and cultural artefacts that ‘tell a story’” (Narratology: Introduction to the Theory of Narrative, 2009). It fits with Norris et al.’s assertion that “There is widespread agreement that narrative requires, at its most basic, an account of a sequence of events” (A theoretical framework for narrative explanation in science, 2009). Norris et al. offer a list of eight narrative elements; the three most important are event-tokens, past time, and agency.

While Shiller’s “narratives” refer to past events, the sequence (i.e. chronicle) is scanty, and there’s very little evidence of agency (i.e. character). Causal model is everything. For example, note Shiller’s choice of words here: “During the Great Depression, there rose a narrative focus on the loss of telephone operators’ jobs, …” He could have, but did not, say, “there rose a focus on narratives about the loss of telephone operators’ jobs.” The loss of jobs (as a parameter in a model or explanation) counts as a narrative for him, rather than stories about particular people who lost their jobs. (My emphasis.)

I’m not saying that Shiller’s use of the term is impermissible – just that it’s not what I mean by it. As Shiller does, let’s delve into the definitions of narrative given by the Oxford English Dictionary:
1. Scots Law
a. An account of a series of events, facts, etc., given in order and with the establishing of connections between them; a narration, a story, an account.
b. Literary Criticism. The part of a text, esp. a work of fiction, which represents the sequence of events, as distinguished from that dealing with dialogue, description, etc.; narration as a literary method or genre.
c. In structuralist and post-structuralist theory: a representation of a history, biography, process, etc., in which a sequence of events has been constructed into a story in accordance with a particular ideology; esp. in   grand narrative n.  [after French grand récit …] a story or representation used to give an explanatory or justificatory account of a society, period, etc.
3. As a mass noun: the practice or art of narration or storytelling; material for narration.
I’m most interested in 2(a), “An account of a series of events, etc.” Shiller prefers 2(c); as he says early in the book (p. xi):
The word narrative is often synonymous with story. But my use of the term reflects a particular modern meaning given in the Oxford English Dictionary: "a story or representation used to give an explanatory or justificatory account of a society, period, etc." 
In fact, even that broader sense is too narrow for him. He continues,
Expanding on this definition, I would add that stories are not limited to simple chronologies of human events. A story may also be a song, joke, theory, explanation, or plan that has emotional resonance and that can easily be conveyed in casual conversation. We can think of history as a succession of rare big events in which a story goes viral, often (but not always) with the help of an attractive celebrity (even a minor celebrity or fictional stock figure) whose attachment to the narrative adds human interest. (My emphasis.)
I think it’s a stretch to call a theory that resonates in casual conversation a “story.” It’s closer to a meme or ideology than a narrative. In fact, Merriam-Webster’s first definition of meme, as “an idea, behavior, style, or usage that spreads from person to person within a culture,” resonates with the phrase “How Stories Go Viral” in Shiller’s book title.

Meaning 1(b) for “narrative” in Merriam Webster perhaps comes closest to what he has in mind: “a way of presenting or understanding a situation or series of events that reflects and promotes a particular point of view or set of values.” Meme Economics sounds like a nicely catchy book title to me, but perhaps it doesn’t have enough gravitas for a Princeton professor.

In a very helpful personal communication in a discussion that rehearsed this note, Petri Mähönen contextualized Shiller’s terminology by suggesting that he is trying to rehabilitate political economy. That is, Shiller may be reminding us about the impact of the economy on the political landscape and the “real world” (and vice versa); and arguing that studying these issues is at the heart of economics. Petri thinks Shiller is arguing that economists should embrace storytelling, borne out by Shiller’s quotation from the T.C. Koopmans article Measurement without Theory (1947):
These economic theories are based on evidence of a different kind than the observations embodied in time series: knowledge of the motives and habits of consumers and of the profit-making objectives of business enterprise, based partly on introspection, partly on interview or on inferences from observed actions of individuals—briefly, a more or less systematized knowledge of man's behavior and its motives.
Petri also notes that while Shiller is predominantly using narrative to mean explanation (OED 2(c), or Merriam-Webster 1(b)), he’s also making a point about behavioral economics: there are narratives in society that directly economies. This is an acknowledgement that stories (outside of economics) do matter. In that sense, Shiller’s usage isn’t totally orthogonal to my preferred definition, “An account of a series of events, facts, etc., …; …, a story” (OED 2(a)).

In the final analysis, I think my direction aligns with Shiller’s. He says on p. xi of the introduction,
I am concerned not with presenting a new narrative but rather with studying other people's narratives of major economic events, the popular narratives that went viral. In using the term narrative economics, I focus on two elements: (1) the word-of-mouth contagion of ideas in the form of stories and (2) the efforts that people make to generate new contagious stories or to make stories more contagious. First and foremost, I want to examine how narrative contagion affects economic events.
This is close to how I think about myth: stories, sometimes carefully crafted, spread by word-of-mouth that affect events by shaping how society imagines itself.

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