Professor Robert Shiller, Nobel Prize-winning economist joins us at the Behavioural Exchange Conference tomorrow. His latest work on narrative economics shows how stories and narratives are inherent to the human experience. We think they could be better understood and deployed in public policy.
Stories and narratives — causal accounts of events in our lives — help us make sense of the world. As the writer Toni Morrison noted in 1993;
The vitality of language lies in its ability to limn the actual, imagined and possible lives of its speakers, readers, writers… It arcs toward the place where meaning may lie.
Narratives matter because just as people shape narratives, so too do narratives shape people. Moreover, narratives can spread between people. The real-world effects of stories — of which an infinite number can be created about a given situation — can extend well beyond the people from which they originate.
Narratives can be nefarious and inflict real harm. They can be ‘flash in the pan’, like the June Bug Epidemic of 1962 where sixty-two employees of a US textile factory shared stories of being bitten by an imaginary bug (with many exhibiting real-life symptoms of nausea, vomiting, and skin outbreaks). At other times, narratives can produce mass hysteria divorced from the truth, leading to far more serious outcomes. The Salem Witch Trials of 1692-93 and the spread of Nazi ideology and associated propaganda during World War II are extreme cases.
Narratives can also be deployed for a great deal of good. President Franklin D. Roosevelt’s ‘fireside chats’ and public addresses are credited with mitigating the disastrous impact of bank runs — themselves driven by self-reinforcing rumours of financial collapse — during the Great Depression. In his stories, Roosevelt used direct, emotion-infused appeals to Americans to banish fear with passages like:
So, first of all, let me assert my firm belief that the only thing we have to fear is fear itself–nameless, unreasoning, unjustified terror which paralyzes needed efforts to convert retreat into advance… Yet our distress comes from no failure of substance. We are stricken by no plague of locusts. Compared with the perils which our forefathers conquered because they believed and were not afraid, we have still much to be thankful for… If I read the temper of our people correctly, we now realize as we have never realized before our interdependence on each other; that we can not merely take but we must give as well; that if we are to go forward, we must move as a trained and loyal army willing to sacrifice for the good of a common discipline.
The reach and long-term impact of FDR’s stories is well-documented. One study notes that by using ‘analogies to help millions of listening Americans understand shifting economic concepts and social philosophies’, FDR’s ‘New Deal’ ‘is entrenched now in Americans’ expectations of government responsibilities.’
Stories and narratives are powerful. But how can they be reliably used by policymakers? Can harmful narratives be combatted? How do you test or evaluate their effectiveness?
Unfortunately, at least in the field of public policy, these questions can be difficult to answer. High quality studies about narratives exist in education, journalism, and marketing. Other studies shed light on why certain information goes viral. In economics, Robert Shiller’s forthcoming book is titled and concerns Narrative Economics. And for many years, literary scholars, sociologists, criminologists, and many others have studied and elucidated the structure of stories and their effects on human behaviour.
Professor Shiller came to BIT headquarters this morning for a roundtable with senior policymakers and will be sharing his thoughts tomorrow in conversation with Dame Minouche Shafik from the LSE at BX2019.
His talk is particularly timely. There are many policy problems around the world where new and powerful narratives are urgently needed to complement traditional policy levers, build consensus, and stimulate collective action. Among the most significant of these is climate change. As summarised by the development economist Jeff Sachs in 2015;
The biggest, most complicated mess that [the world is] in… is climate change. It’s got every attribute of just a terrible, terrible problem. It’s global, it’s long-term, it’s uncertain. It’s got vested interests, it’s got hugely unequal payoffs, it’s got everything wrong with it as a problem… There is no one leader that defines the solution. We have to actually agree on something.
Whether for extinguishing fires in the Amazon, limiting global warming to 1.5 °C above pre-industrial levels, or reducing meat consumption (an industry that accounts for approximately a fifth of global emissions), narratives can provoke emotional responses and align perspectives among diverse groups.
Join us tomorrow to hear more from Professor Shiller and others from the incredible cast of speakers at Behavioural Exchange 2019.