but will such research be done on a sufficient scale in the future? How
effectively will substantial research on narrative economics use the large and
growing amounts of digitized data? Will narrative economics help us create
better, more accurate economic models to forecast economic crises before they
begin or get out of hand? To move forward, we need to recognize the importance
of collecting better data and integrating lessons from data into existing economic
models. We need to research issues that today are considered peripheral to
economics, and we need to collaborate with non-economists, who have different
perspectives. For example, we can incorporate mathematical insights from other
fields, such as mathematical epidemiology, to create a link between
mathematical economics and the humanities. We must expand the volume of
available data and study many economic narratives together. We must account
for changing narrative epidemics in our forecasting models.

A Place for Narrative Economics in Economic Theory
As we saw in chapter 3, narrative economics has been long neglected. That is
likely partly because the relationship between narratives and economic outcomes
is complex and varies over time. In addition, narratives’ impact on the economy
is regularly mentioned in journalistic circles, but often without the demands of
academic rigor. The public opinion of journalistic accounts of narratives may
have been diminished by aggressive economic forecasts that proved wrong.
In addition, economists long assumed that people are consistent optimizers of
a sensible utility function using all available information, with rational
expectations. As we’ve noted, this theory omits some clearly important
phenomena. Fortunately, the behavioral economics revolution of the last few
decades has brought economic research closer to that of other social sciences.
No longer do economists routinely assume that people always behave rationally.
One widespread and important innovation is the creation of economic think
tanks interested in creating policies based on the insights of behavioral
economics. These think tanks have been called “nudge units,” following the
Behavioral Insights Team in the UK government in 2010. Working with the
ideas popularized by Richard Thaler and Cass Sunstein in their 2008 book
Nudge: Improving Decisions about Health, Wealth, and Happiness, these units
try to redesign government institutions toward “nudging” people away from their
irrational behavior without coercing them. According to the Organization for
Economic Cooperation and Development, there are now close to two hundred
such units around the world.6
I advocate formalizing some of the intuitive judgment that national leaders
already use to acknowledge and harness changing economic narratives. Leaders
must lean against false or misleading narratives and establish a moral authority
against them. Their first step is to understand the dynamics of the narratives.
Their second step is to design policy actions that take account of narrative
epidemics. Policymakers should try to create and disseminate counternarratives
that establish more rational and more public-spirited economic behavior. Even if
the counternarratives are slower to take effect than a more contagious destructive
narrative, they can eventually be corrective.
For example, as noted in chapter 10, US President Franklin Delano Roosevelt
in his March 4, 1933 inaugural address7 at the bottom of the Great Depression