Thank news are actually old concepts. Maybe i can ask anyone here, are you a classic scholar. How did he translate news into latin. I dont expect anyone to know that. Does anyone know this. You are not old enough. [laughter] the latin word is rumor. It is the same meaning as today. These to beat worried about rumors in those days so they can make or break you. So has brought new in my scope of history way back. So im interested in understanding economics events. Like what causes a boom like what causes a boom or a session with some countries seem to be prosperous and others not. That is the wealth of the nati nation. I am taking what i say is and in usual perspective on it. That thinking that these events happen not because of some exogenous, if it like sunspots. But be because of talk. Most of you are not economists right. When i said sunspots, there is a famous article in the late 19th century, by William Stanley devens. He was a british economist who said that he finally figured out, what drives the world economy. Why do they have these bus the span over the whole world. And he said has to be something that clippers the whole world. And then he thought of the sun. Because the sun goes through his periodic storms, generating sunspots. In the solar is lower. So thats it, submissions sunshine sometimes in agriculture fails and then drags everyone down with it. But it turns out that he was wrong. You cant actually, the data dont match up with that. The solar output isnt that variable. So what is it. You are talking right now about it and discussion, that will cover the whole world. Why would that happen. There are all of these countries and thousands of miles apart, there might be some good economic reasons for it. I am thinking that a lot of it is due to talk. And something going viral. Even in olden times, people talk. Theyve always talk. It is human nature to talk. Anthropologists who study human universals. In one absolute universal that is absolutely every Human Society that is that they talk. And secondly, they love to gossip and they love Human Interest stories. But they dont do note the draw diagrams like economists do. Generally they dont. So im thinking it must be met. And im thinking that big changes in the world economy, take place because of new and different stories. So i coined the term narrative economics for my president ial address. I gave it before the Economic Association in 2017. And i called it narrative economics. I presented to an audience of 900 economists. And i was faintly careful of the profession, right to the profession of their annual meeting. I said, why is it that we dont study the stories that people are telling. The stories that go viral. It is just not an art tool bag. And i was afraid i get booed. They dont generally move people. But nobody bowed and they applauded the end of my talk. So that enabled me to write a whole book about it. So the term narrative economics actually does go back over 100 years. It used to mean, economic history, you would tell stories and the chronologies about really a financial crisis. He was a first this banquet on epic weather. An argument started to do this with that. And its just a sequence of events. And thats not what, i mean. Narrative economics is the study of popular narratives. We do is try to get into people news thinking. People dont tell you what their economic model is. Have you ever had a dinner conversation we discussed economic models. Probably not. So, we need to be realistic about what forces changed to people news thinking. Economists have a habit of assuming that people are rational. On the right again with the economist they would be rational. Also consistent, threetime and not subject to any fads or phases in a new idea. I say we have to move past that. So narrative economics is about people news stories. In another reason why economists dont like to talk about it is it is kind of embarrassing. So the stories dont sound very intellectual. Theyre all real people and some of them are intellectuals of the art. We have to look at the stories that are contagious. That means go viral. And we do see go viral, that is a disease analogy. I have been giving talks in washington this week about this book. I have to cut it back a little bit. Scholarly, so the key idea that i guess is essential to this book is to say about epidemiology. I also like to say about other, academic disciplines are is it too compartmentalized. And we are often in graduate school where i teach at yell, ready graduate school, you are preparing to students. You say thats your most Important Mission is to prepare them to play the game as an economist. See focusing on research methods. They are teaching a course in economic history which is becoming rare these days, but if you are, you will probably juice it up with a lot of econ metrics in Statistical Analysis because that will help them on the dissertation. And then you just lose sight, there is never time to read psychology or sociology or weve god for bed, epidemiology. What is that. We dont teach that. But looking at the basic epidemic model in medical schools the medical students learn. There is a mathematical epidemiology and it this literature is about 100 years old. It is developed quite a bit. But i will see the key idea, i am oversimplifying if it but any disease, has a contagion rate. And as the rate of growth of the infected population. But there is also a recovery rate. Removal rate. People get over the disease. Or they die. But lets be positive and see to get over the disease. There are immune from it. So in order for an epidemic to get started, it has to have a contagion rate above the recovery rate. So epidemic the kind of mysterious and medicine. You see an epidemic, just suddenly seems to come out of nowhere. In western epidemic in this town. And not in the neighboring town. And while the epidemiologist, with research that. And if i see will theres Something Different about this town in the contagion rate has gone up. And maybe they have changed some of their behaviors or they are together bark or Something Like that. So they will be more contagion it will be faster and will tip it up above the recovery rate and you see an explosion of the disease in the town. And then mysteriously it will change. It will go down. Usually you dont know exactly what people are doing that is different that made it more contagious. And so, thats a lesson that i am trying to explore and now looking at diseases but looking at narratives. And the idea is that some narratives are very contagious and some are not. For kind of literary reasons, you have in this bookstore, books by many talented writers. It is hard for us to know how they know it. Some books are best sellers and how would you know and how can you predict that. There are people who have tried to computerize and identify the sellers. As a book out recently, called the bestseller code that predicts, you can give it a test of a book and it will be a prediction that will become a bestseller. I dont say that field is very far advanced. There is some Human Element thats going to be a long time before computers can capture that. Theres something in the Creative Genius of some people. So give one example from my book. It is in all example but i like it because it is precedes the computers. This is the example of the laugher occurred. Have any of you kindness are in the spring i get recognition. It means contagion. Did you learn it in a graduate poet program in economics. Im sorry to do this. [inaudible conversation] okay all right, we have a four distinguished audience the new. He said he was on reagan. Congress. He ran the computer model. Connect the reagan stacked cut. [laughter] and have formulated that. [inaudible conversation] he heard in the news. Okay, so some of you younger people might not know. But i will tell you the story. Part leffler had dinner 1974 with Donald Rumsfeld who was secretary of defense, and cheney was later to be Vice President of the United States. An art, he was an economist and also a wall street journal writer, was there. Laugher pulled out apparently polenta napkin, and drew a diagram illustrating why it is that we might expect, if we cut taxes stacked revenue will actually go up. It is story. Why the world does that go viral. Okay because it is partly because it would help justify stacked codes. I say it takes more than that. Is that an original idea that cutting taxes might raise revenue. While i can quote him and says, no it was not an original idea. In fact art represent as all of way back to the economists in chaldean, who wrote in his economics letter to the 14th century. That can happen cutting stacked rates can sometimes raise revenue. I say its absolutely right. It can happen. Only known it for hate hundred years [laughter], 1900 but quite a long time. What is the go viral i say the viral nature of the story has something to do with visual imagery in the napkin some outfits and and it was raining, on rhetoric, do you know the roman senator. Here is this about 2000 years ago. He says that. Through the speeches fill them with visual imagery because people remember the member. Some visual imagery, and it sort of has a story quality. It doesnt exist. But it used to be a nice restaurant in washington dc. And so somehow, when he figured out that it was a good story. It was his individual genius. And he told well. In his book. It came out of the same time as rubik news cube. Do you remember that. That is not an economic narrative. But it was a narrative. Rubbing sku went viral. It depends on the source art was a life changer and came out with a book and recording and he was a celebrity from that one narrative and then, this is the nice part of the story, the National Museum of American History right here in washington was developing a special exhibit in Business History and somebody there thought i wonder if we can get that napkin. Does anyone still have it. And so the gentleman had passed away many years later but his wife is alive and huma look among his things and we arent looking for a napkin with a drawing on it and so she then withdrew his things and she found, lo and behold there was a cloth napkin with a diagram on it. And she called amusing bags and i have it. You can now see it, is going to go to the museum today but it didnt have time. But i want to see is visible and it is on their website and they are very proud of it and theres only one problem. Eric porter called art and asked bump up it. And he said, i dont believe it. And the guy simply what you mean you nobly that it was you who did it. And he said my mother taught me never to write on nice things like a cloth napkin and fancy restaurant. To make you wouldnt do that either right. [laughter] if he had a restaurant, would you write on the cloth napkins. It just seems like no good person would do that. But a strong narrative doesnt have to be true. [laughter] was apparently, oh by the way, if you want to watch it, somebody got art and cheney and Donald Rumsfeld together to reenact the very dinner and then you can see it. But i say this had economic impact. It helped elect Ronald Reagan and before that, i say it probably helped elect, she was elected but Margaret Thatcher of the uk, was appointed, how do you see it. It penetrated english language countries. This narrative did. I looked it up in france. I looked for, i know how to see it, but it did get attention speaking french. Did i see that right. So it had a little epidemic in france but the next thing they did, was to elect france the first socialist president of france. So the narratives have a patriotic element and i havent element of identity. You may sign her life and to some story that has a patriotic american, you did to repeat stories about americans or at least other close countries like australia. And so i say that that is where where things go. So i have so much more, let me just talk about two things. One is home prices. The other is the Great Depression. We are just coming out from the Great Recession, which is named after the Great Depression. So is very much on our minds. So it would shy differs. Let me start with home prices. Through a huge boom in home prices. In the United States and also in the uk and other englishspeaking countries particularly in the early 2000 news. And the moon started to falter around 2005, and reach a peak in 2006 and then its faded away. And were leaving in the aftermath of that. So what caused that. One thing i can do now with digitized text as i can search for phrases in seo, and they were. Ive been interested in this a long time so my research is back many years on this. I look for the term housing bubble. Almost nobody says housing bubble in 2003 or 2002. That is suddenly sued. I already get google searches in the trend which allows you to account google searches sars in 2004. So you see this big spike up in 2005 and a 2006 where it everyone surfing his for the term housing bubble. Another thing that i found doing various digital searches, is the term leaving houses. Sadly came up at the time. Typically it was used derisively, it like you are putting into this housing bubble. Typing houses means buying a house and la it just a few months later at a huge profit. But the narratives were going around at that time, that flipping houses was highly profitable. And there is just excitement and maybe can remember it. Only a few years ago, i used to listen to cabdrivers. It can draw them out. They always come around to home prices before long. I would listen in restaurants and i would hear home prices. Sometimes. And i usually did. So it seemed like everyone was talking about it. And then you became embarrassed. Because they thought that they mayday big mistake never just foolishly, been a bubble. It was a sort of, some books written about how to flip houses. And you had, and aftermath, i say donald trump talks about a little bit. He wrote many motivational books are presented. Among them, motivational about how to make a lot of her name no sacredness what he does. And help promote his career as well. The other one i wanted to talk about briefly is the Great Depression. There was a stock market crash in 1929, and after that there was an economic depression until world war ii. A decade, the decadelong thing, is the legend today. The legend of the Great Depression came back, i can tell you that i did searches and it came back violently in 2008. And we have named it the Great Recession because everyone was thinking, is this the Great Depression again. There was a National Panic because people still remembered the narrative. It faded a lot but it was in the back. It was like an Infectious Disease in epidemic, and a stop bothering very many people so theyre not really concerned about it but then something will change and it becomes contagious maybe it is a mutation in the disease or new variation of the narrative and then it comes back. But what else, does it in the hills have a story of the Great Depression. I wonder if i can elicit from one of you. Franklin dunbar roosevelt mayday famous in his inaugural address in 1933, he explained what we have to worry about. [inaudible conversation] i heard that from someone else to. That is so famous, and the only thing we have to fear, is fair in itself. At the Great Depression is the confidence thing. Always the other people and we say that they are psychologically depressed. Lucky incompetent so i pulled back to parade it is a contagion. Theories. As one of mine sort of. By the way, i. Out in the Book Franklin rosalinda was not the original there. Maybe he sent it to. I dont know. It was mayor carly news assistant in austin said exactly that. Malic mayor carly, who is he. It just wasnt a good story. When roosevelt said it was suddenly a good story. Yell professor irving fisher, said it around the beginning of the depression. Way before 1933 so we write stories about celebrities. We like stories that have certain things like inauguration. On the way if you are watch 1933 the year of roosevelt just search for it on youtube. It was all filled beautifully done, you can see it. He has more of a magisterial and futuristic voice in our current president. [laughter] but he was a good speaker. All of you with one thought. I say its important. There were other causes of the Great Depression. And i say one of them which was talked about a lot in the Great Depression, but we dont associate it was that robots are coming to replace jobs. And people are going to be permanently unemployed which means with these robots. You may see wait a minute, over the tagamet were they talking about robots in 1930s. You bet they were. The term robot came from a play. Charlie chaplin had a nice movie about that called modern times. You should watch it, it is a great movie. Its about Charlie Chaplin was working in a factory. It was automated in the sense that it had conveyor belts. He had to work, he had do the same task and it is really funny. It droving crazy. I am thinking that that story that was happening the Great Depression was repeated many times in the Great Depression that they see this is the power edge. We have machines now with so much horsepower. They outnumber a few months by a thousand to one. A thousand horses, for every human. So how can people stay employed. That was on their minds. In the industry my book is about the dial telephone. It used to be and you probably know how to operate the telephones back then. And that all telephones from before in the 30s, you pick it up, and is the direct connection to the operator. And usually was a she she would come out and see, number please. You would repeat the number and she was on the switchboard and she would connect you. But