Daily Archives: October 27, 2019

In Search of Economic Narratives

A few years ago, I joined an organization of economic historians. Having written several books on economic history, I thought my involvement in the organization might help me broaden my horizons. But the main debates I heard at the group’s annual meeting concerned whether an equation used the correct variables or an author had adequately accounted for heteroskedasticity. Economic history, as practiced in academia, seemed to be mainly an exercise in regression analysis. Only the most senior professors, free from the demands of tenure committees, dared look beyond their spreadsheets and consider the meaning and implications of their historical research. I let my membership lapse.

I recalled that meeting as I read a recent Washington Post article about the need for economists to tell stories. According to the author, Heather Long, central bank governors from countries such as Australia and Sweden used the annual Federal Reserve conference at Jackson Hole, Wyoming, this past August to discuss the role of narrative in explaining economic policy to the public. A new book by Yale University economist Robert Shiller, Narrative Economics, emphasizes that economic outcomes often depend on public beliefs, and those beliefs are shaped by the stories people hear and remember. “Economists can best advance their science by developing and incorporating into it the art of narrative economics,” he writes.

Unfortunately, these ideas haven’t sunk very deeply into the economics profession, and certainly not into the historical branch of it. Economic historians are few and far between in university history departments; by and large, they’ve relegated themselves to economics departments where their advanced quantitative techniques are appreciated.

Traditional history departments, moreover, seem happy for the economic historians to stay away. There even seems to be a line between business historians, who typically are less addicted to econometrics and are usually housed in history departments, and economic historians, who mainly crunch numbers. I recently met an economic historian teaching at an influential business school who told me that he’s never met the business historians teaching at the same school. He didn’t seem to find that unusual.

The artificial separation of economic history from history has left students in history classes studying political or cultural or social or gender history with little attention to the economic background. Similarly, the public’s knowledge of history often comes from books or television shows in which economic factors are an afterthought. If economists were better at telling stories, their views might get more air time, and the public might have a broader understanding of history. Shiller is right about that.

But telling better stories requires having stories to tell. Economic historians, I would assert, tend to shortchange non-quantitative sources of information — including oral histories and news articles as well as work by historians — in favor of data that can be subjected to the quantitative tools that define academic economics. If economic historians want to offer better narratives, they have to understand that stories should be not only an output, but also an input.