That's the world we live in: when it comes to economics, people have emotions; it's not like chemistry or physics.
Interpretation
Economics is influenced by human emotions, unlike the natural sciences which are more objective.
This quote by Robert J. Shiller emphasizes the unique nature of economics as a social science. While fields like chemistry and physics rely on objective laws and principles, economics is deeply intertwined with human emotions and behaviors, which can lead to unpredictable outcomes and decisions. Understanding economics requires recognizing the emotional factors at play in people's choices and market dynamics.
In practice
During a lecture on market dynamics, this quote could illustrate the importance of psychological factors.
Those on the downside of rising economic inequality generally do not want government policies that look like handouts. They typically do not want the government to make the tax system more progressive, to impose punishing taxes on the rich, in order to give the money to them. Redistribution feels demeaning. It feels like being labeled a failure.
Speculative markets have always been vulnerable to illusion. But seeing the folly in markets provides no clear advantage in forecasting outcomes, because changes in the force of the illusion are difficult to predict.
Money management has been a profession involving a lot of fakery - people saying they can beat the market, and they really can't.
We should not be focusing on quick solutions. The really important concern for policymakers everywhere is to prevent disasters - that is, the outlier events that matter the most.
If we wait until income inequality is much more severe, we will have a whole class of new superrich who will probably feel entitled to their wealth and will have the means to defend their interest. That's already gone far enough. We shouldn't let it become more extreme.
I think that a lot of people in all walks of life have the impression, of course, that, 'I specialize in something. I can't - I don't have the time to read other things. I'll just go to pure entertainment when I'm relaxing, and then I'll come back to my pure specialty.' That produces - that attitude produces idiot savants, unfortunately.
The minimum wage in Denmark is about twice that of the United States, and people who are totally out of the labor market or unable to care for themselves have a basic income guarantee of about $100 per day.
Tax laws favor capital over labor, giving capital gains a lower rate than ordinary income. The rich get humongous mortgage interest deductions while renters get no deduction at all.
Most high-income people in our country do not realize that their incomes are being subsidized by their protection from competition from highly skilled people who are prevented from immigrating to the United States. But we need such skills in order to staff our productive economy, so that the standard of living for Americans as a whole can grow.
The big bankers of the world, who practise the terrorism of money, are more powerful than kings and field marshals, even more than the Pope of Rome himself. They never dirty their hands. They kill no-one: they limit themselves to applauding the show.
Regulating and taxing marijuana would simultaneously save taxpayers billions of dollars in enforcement and incarceration costs, while providing many billions of dollars in revenue annually.
When you bring in multi-brand retail items into the country, you're not just bringing the products, but you're also harming local manufacturers.
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