How Stories Go Viral and Drive Economic Events

Money For the Rest of Us

J. David Stein

Investing, Investing Podcast, Business, Economics, Economy

4.5 • 1.4K Ratings

🗓️ 15 April 2020

⏱️ 26 minutes

🔗️ Recording | iTunes | RSS

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Summary

How the stories we tell ourselves lead to economic change. What are current pandemic related narratives that are impacting financial markets and the economy.

Topics covered include:

Examples of mathematical models for epidemics.
What are the risks when the global economy is opened again.
Under what circumstances do individuals rely on anecdotal evidence rather than statistics.
What are some propositions that underly how economic narratives spread.
What are some examples of major narratives that impact the economy.
How humans have a bias toward action and how to deal with that when the best course is to stay in place.
Should investors be increasing their stock exposure now that the markets are rallying and central banks are taking aggressive action.

Thanks to Policygenius and LinkedIn for sponsoring the episode.

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Transcript

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0:00.0	Welcome to Money for the rest of us. This is a personal finance show on money, how it works, how to
0:07.6	invest it, and how to live without worrying about it's
0:14.0	I'm your host David Stein today's episode 294. It's titled How Stories Go Viral
0:17.8	and Drive Economic Events.
0:20.0	I recently celebrated a birthday. It was a good day, peaceful. What I didn't have was a birthday cake, and we did not sing the happy birthday song.
0:34.0	Robert Schiller in his book Narrative Economics
0:38.0	and in which today's episode title comes from the subtitle of his book,
0:42.0	wrote that the happy birthday song may be the best
0:47.0	known song of all time.
0:49.6	He mentioned it's not particularly admired for its beauty or grace.
0:53.2	It grew unplanned and uncontrolled, he writes.
0:56.7	There is no history of a government edict requiring the song to be sung,
1:00.8	or a marketing campaign promising lifelong popularity for those who sing it or have it
1:07.2	sung to them. The songs spread like an epidemic in the 1920s and 30s fell back a little bit during World War II and then it began again.
1:19.0	Warner Chapel Music had a copyright from 1935 collected millions of dollars up until 2016 when it was
1:28.2	determined that happy birthday to you was very, very similar to an 1893 song titled Good Morning to All.
1:39.6	Sounded exactly the same and so they lost the trademark. The Happy Birthday song the more familiar I think with the mathematics behind epidemics.
1:55.0	One of the first theories was proposed in 1927 by William Ogilvy Kermack and Anderson Gray McKendrick.
2:05.0	Kermack was a Scottish biochemist,
2:07.5	Mekendrick a Scottish physician.
2:10.4	It was a simple model.
2:11.6	It was called the Sur model, where they divided the population.
	...

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