Listen Carefully for Hints of the Next Global Recession
nytimes.com
nytimes.com
We've known this all the way back to Keynes. That's why he wanted the government to step in and pick up the slack created by individual consumers creating a self fulfilling prophecy of cutting back their own spending by 10% in preparation for a possible bad economy. Not only would the government spending help offset reduced consumer spending but the knowledge, within the broad population, that the government would do this would reduce fear of a recession and thus reduce the recession inducing behavior.
There is a very palpable sense of people wanting the economy to collapse, and I'll bet a lot of it is spite from renters who are having their rents jacked, and being completely priced out of even entry-level homes in many markets. They can't get a fair shake at things, so they want to watch things burn.
Not to say that I entirely blame that mentality, but I'm just very curious what tangible impact that has and how to measure it from a quantitative standpoint. Are there any good sentiment analysis tools for this sort of thing and correlating it with the market/economies?
This sort of ooga-booga is why it's almost impossible to take economists very seriously.
Any sort of study with pretensions to scientific rigor (look at all that fancy math!) that, at the end of the day, falls back on something like animal spirits, deserves quite a bit of mockery.
He's not advocating for investing based upon animal spirits. He's explaining that it does exist and is a problem. Do you not believe that financial bubbles or manias occur?
Take a look at Al Roth's work on matching markets (useful for organising more efficient organ donation or school attendance systems) or Jim Heckman's work on policy evaluation (useful for measuring the impact of educational policy on lifetime earnings children.
http://www.economist.com/blogs/freeexchange/2015/06/alvin-ro...
http://www.sciencedirect.com/science/article/pii/03044076859...
This is a good point: macro and micro are rather different beasts, especially when it comes to the "science" question.