Preface: What Is Narrative Economics?
1. Allen, 1964 [1931], p. 261.
2. Allen, 1964 [1931], p. viii.
3. “Descriptive economics again divides into a formal and narrative branch; of which the former
analyzes and classifies the conceptions needed for understanding the science in its widest applications, and
the latter investigates historically and comparatively the various forms of economic life exhibited by
different communities and at different epochs” (within entry “Method of Economics”), Palgrave, 1894, p.
741.
4. Interest in the role of narratives in driving social movements has been expressed by sociologists in the
New Social Movement literature; see Davis, 2002.
5. Fair and Shiller (1989) show evidence that forecasting models have some ability to forecast in the
short run, but Lahiri and Wang (2013) show with the Philadelphia Federal Reserve Bank Survey of
Professional Forecasters that there is no “significant skill” at attaching a probability to a one-quarter GDP
decline in the United States one year in the future. The probability of GDP decline that the professionals as
a group have been giving at this forecast horizon is worthless.
6. Andrew Brigden, “The Economist Who Cried Wolf.” Fathom Consulting, February 1, 2019, https://
www.fathom-consulting.com/the-economist-who-cried-wolf/#_ftn2. Other studies that have found little
success of professional forecasts of recessions at longer horizons include Zarnowitz and Braun, 1992;
Abreu, 2011; and An et al. 2018.
7. Koopmans, 1947, p. 166.
8. Boulding, 1969, p. 2. In January 2018, there was a special posthumous session in Boulding’s honor at
the annual meeting of the American Economic Association in Philadelphia, “Kenneth Boulding and the
Future Direction of Social Science.”
9. Boulding, 1969, p. 3.
10. Irving Kristol, “The Myth of Business Confidence,” Wall Street Journal, November 14, 1977, p. 22.
11. Addams headed an international women’s conference in Zurich in 1919 that issued a statement
predicting that the Versailles treaty would create animosities that would lead to future wars. She won the
Nobel Peace Prize in 1931.
12. Keynes, 1920 [1919], p. 268.
13. My publications started with my 1972 doctoral dissertation at the Massachusetts Institute of
Technology entitled “Rational Expectations and the Structure of Interest Rates.” That dissertation, written
under the supervision of Franco Modigliani, who influenced me in trying to find a realistic grounding for
economic theories, was not fully comfortable with the economists’ favorite notion that all people are
rational and consistent maximizers. Soon thereafter I wrote “Rational Expectations and the Dynamic
Structure of Macroeconomic Models: A Critical Review” (1978). I continued with “Stock Prices and Social
Dynamics” (1984); Irrational Exuberance (first edition, 2000); and two books coauthored with George
Akerlof, Animal Spirits: How Human Psychology Drives the Economy and Why It Matters for Global
Capitalism (2009), and Phishing for Phools: The Economics of Manipulation and Deception (2015).

Chapter 1. The Bitcoin Narratives
1. Quoted by Yun Li, “Warren Buffett says bitcoin is a ‘gambling device’ with ‘a lot of frauds connected
with it,’ ” CNBC May 4, 2019, https://www.cnbc.com/2019/05/04/warren-buffett-says-bitcoin-is-a-
gambling-device-with-a-lot-of-frauds-connected-with-it.html.
2. Paul Vigna and Steven Russolillo, “Bitcoin’s Wildest Rise Yet: 40% in 40 Hours,” Wall Street Journal,
December 7, 2017, p. 1.
3. The Merkle tree and the digital signature algorithm are essential elements of the Bitcoin protocol
described in the original Bitcoin paper signed by Satoshi Nakamoto in 2008. The equilibrium of the
congestion queuing game is described in Huberman et al., 2017.
4. Proudhon 1923 [1840], p. 293.
5. Sterlin Lujan, “Bitcoin Was Built to Incite Peaceful Anarchy,” https://news.bitcoin.com/bitcoin-built-
incite-peaceful-anarchy/. Passage is dated January 9, 2016.
6. Ross, 1991, p. 116.
7. Himanen, 2001.
8. Zoë Bernard, “Satoshi Nakamoto was weird, paranoid, and bossy, says early Bitcoin developer who
exchanged hundreds of emails with the mysterious crypto creator,” Business Insider, May 30, 2018, http://
www.businessinsider.com/satoshi-nakamoto-was-weird-and-bossy-says-bitcoin-developer-2018-5.

Chapter 2. An Adventure in Consilience
1. For example, calls for a broader approach to economic research have asked for the study of “social
dynamics” and “popular models” (Shiller, 1984), “culturomics” (Michel et al., 2011), or “humanomics”
(McCloskey, 2016); or for more “narrativeness” (Morson and Schapiro, 2017) or for “fictional
expectations” (Beckert and Bronk, 2018) or “diagnostic expectations” (Gennaioli and Shleifer, 2018),
“policy legends and folklists” (Fine and O’Neill, 2010), or “information-processing difficulty” in
responding to news that makes “changes in expectations” into “an independent driver of economic
fluctuations” (Beaudry and Portier, 2014).
2. Sarbin, 1986.
3. Berger and Quinney, 2004.
4. Rashkin, 1997.
5. Ganzevoort et al., 2013.
6. Presser and Sandberg, 2015.
7. Bettelheim, 1975.
8. Kozinets et al., 2010.
9. O’Connor, 2000.
10. O’Barr and Conley, 1992.
11. Jung, 1919.
12. Klein, 1921.
13. Klages, 2006, p. 33.
14. Klages, 2006, p. 33.
15. Brooks, 1992, location 74.
16. Brooks, 1992, location 749.
17. For a survey of neurolinguistics, see Kemmerer, 2014.