Ever since Adam Smith, the central teaching of economics has been that free markets provide us with material well-being, as if by an invisible hand. Robert Shiller delivers a fundamental challenge to this insight, arguing that markets harm as well as help us. As long as there is profit to be made, sellers will systematically exploit our psychological weaknesses and our ignorance through manipulation and deception. Rather than being essentially benign and always creating the greater good, markets are inherently filled with tricks and traps and will “phish” us as “phools.”
This represents a radically new direction in economics, based on the intuitive idea that markets both give and take away. We spend our money up to the limit, and then worry about how to pay the next month’s bills. The financial system soars, then crashes. We are attracted, more than we know, by advertising. Our political system is distorted by money. We pay too much for gym memberships, cars, houses, and credit cards. Drug companies ingeniously market pharmaceuticals that do us little good, and sometimes are downright dangerous. Phishing for Phools explores the central role of manipulation and deception in each of these areas and many more. It thereby explains a paradox: why, at a time when we are better off than ever before in history, all too many of us are leading lives of quiet desperation.
Robert J Shiller (@RobertJShiller), the recipient of the 2013 Nobel Prize in economics, is a best-selling author, a regular contributor to the Economic View column of the New York Times, and a professor of economics at Yale University. His books include Finance and the Good Society, Animal Spirits (co-written with George A. Akerlof),The Subprime Solution, The New Financial Order and Irrational Exuberance.
Wouter Den Haan is Professor of Economics at LSE and Co-Director of the Centre for Macroeconomics.
The Department of Economics at LSE (@LSEEcon) is one of the largest economics departments in the world. Its size ensures that all areas of economics are strongly represented in both research and teaching.
The Centre For Macroeconomics (@CFMUK) brings together world-class experts to carry out pioneering research on the global economic crisis and to help design policies that alleviate it.
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