Professor William Goetzmann is the faculty director of the MBA for Executives Asset Management area of focus and selects a variety of guest speakers to participate in the asset management colloquium series. Recently, students were treated to a very appropriately timed virtual guest speaker. Professor Robert Shiller, the Yale University Sterling Professor of Economics and Nobel Laureate, spoke to the asset management students largely about what he calls “narrative economics”—what people think about the economy, what drives these thoughts, and how they go viral.
Shiller addressed nine perennial economic narratives but focused mainly on today’s economic narrative. “Markets are driven by stories and economists must know this at some level. We need to understand the narrative—the narrative today is coronavirus.” He went on to say, “There are themes and narratives in history that repeat themselves over time and they will repeat economically.”
Shiller took some time to talk about the current effects of the coronavirus narrative on the economy. Factors such as how long shelter in place orders are in effect, when people get back to work, and the development of a vaccine will alter the effects this narrative has on the economy.
Professor Shiller closed his presentation by pointing out that the future of narrative economics will change due to new data and technology availability. Economists can better collect information on popular economic narratives that will forever change the way we think about and react to economic events. These new capabilities will affect contagion and recovery. Thinking about the coronavirus, Shiller says, “I think after this, there will be a whole new field of epidemic economics.”