The SQUEEZE: The global financial crisis has had a great impact upon business, personal wealth, and everyday living. In analyzing the situation, economists George Akerlof and Robert Shiller challenge the economic wisdom that caused a modern financial catastrophe and propose a new vision that would help to restore prosperity. In Animal Spirits: How Human Psychology Drives the Economy, and Why It Matters for Global Capitalism, Akerlof and Shiller address the need for active government role in ensuring proper economic policymaking. The authors use the term “animal spirits” to refer to Keynesian thought regarding the despondency that led to the Great Depression and the subsequent psychology that encouraged and accompanied recovery. The authors provide examples of contemporary animal spirits: bad faith, fear, confidence, and corruption. Managing animal spirits requires a steady hand by government and it is within this context that Akerlof and Shiller offer a roadmap for reversing current financial misfortunes.

Notable Endorsement: “A truly innovative and bold work. . . . At a time when plummeting confidence is dragging down the market and the economy, the authors' focus on the psychological aspect of economics is incredibly important.”-- Michael Mandel, BusinessWeek

Common Q’s Answered by this Book:

• What impact did the 2008 financial crisis have on global business?
• How did current economic wisdom contribute to global financial catastrophes?
• What five psychological factors will help to restore economic prosperity?

About the Author: George A. Akerlof is an American economist. Akerlof is the Koshland Professor of Economics at the University of California, Berkeley. Akerlof won the 2001 Nobel Prize in Economics and is best known for the article titled “The Market for Lemons: Quality of Uncertainty and the Market Mechanism,” which was published in Journal of Economics (1970). Akerloff’s research interests include efficiency wage models, efficiency wage hypothesis, and neoclassical economics. Akerloff completed a bachelor’s degree from Yale University (1962); and a doctorate degree from MIT (1966). Akerloff has taught at the London School of Economics. For more information, visit: http://elsa.berkeley.edu/~akerlof/.

Robert J. Shiller functions in multiple roles. Shiller is the Stanley B. Resor Professor of Economics at Yale University; he serves both in the Department of Economics and in the Cowles Foundation for Research in Economics at the university. Shiller is also a fellow of the International Center and Finance located at Yale School of Management. Shiller writes extensively on such topics related to financial markets, financial innovation, behavioral economics, statistical methods, public attitudes, and moral judgments regarding markets. Shiller’s book titled “Market Volatility” (MIT Press, 1989) is on the subject of price fluctuations in speculative markets for which he bases his research on mathematical and behavioral analysis. In 1993, Shiller published “Macro Markets: Creating Institutions for Managing Society’s Largest Economic Risks” (Oxford University Press); in the book Shiller proposes a new form of risk management contracts. Shiller graduated with a bachelor’s degree in economics from the University of Michigan; and also with a doctorate in the same major from the Massachusetts Institute of Technology (1972). He currently serves as Vice President of the American Economic Association. For more information about his current projects, visit: http://www.econ.yale.edu/~shiller/. For information about topics related to Shiller, visit: http://topics.bloomberg.com/robert-shiller/. For more information about the book, visit: http://www.irrationalexuberance.com/about.htm

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Publisher: Princeton University Press (February 2010)