What is Narrative Economics?

Narrative economics is about how stories and perceptions are spread between people and how these can change perceptions of events and economic decisions. Just think of recessions, bubbles and so on. Such stories can go viral and reinforce beliefs such as that individual shares and house prices can only go up. Regardless of whether such beliefs are right or wrong, they will be able to influence how people and companies make financial decisions. Traditionally, the subject of economics has placed little emphasis on explaining and understanding this phenomenon, but, as the video below shows, understanding narrative economics can contribute to a greater understanding of economic events that lead to recession, inequality and so on.