Mainstream economists blamed public irrationality for both bubbles and post-crisis malaise

Evidence

Stretching beyond the realm of secondary markets, speculation was also coming to be what made a new type of populist politics tick. Akerlof and Shiller (2010) wrote, in their acclaimed Animal Spirits, that post-­2008 recovery had been inhibited by two key factors: the future’s rising uncertainty and the public’s anger. Shiller (2015), in his earlier best-­selling Irrational Exuberance, had singled out the public’s irrationality as the cause of speculative bubbles and thus a key threat to healthy economies. Alan Greenspan, who first coined the term irrational exuberance in the 1990s, now appeared further alarmed by “irrational populism” at the ten-­year anniversary of the 2008 crisis. … The high stock market levels did not, as so many imagine, represent the consensus judgment of experts who have carefully weighted the long-­term evidence. The markets have been high because of the combined effect of indifferent thinking by millions of people, very few of whom have felt the need to perform careful research[,] … who are motivated substantially by their own emotions, random attentions, and perceptions of conventional wisdom. Their all too human behaviour has been heavily influenced by news media that are interested in attracting viewers or readers. — Aris Komporozos-Athanasiou, Speculative Communities, 98

Categorization

• XREF: connects to: Post-crisis behavioral economics reduced Keynes to irrationality that disrupts general equilibrium. — Philip Mirowski, Never Let a Serious Crisis Go to Waste, 729

Broader Connections

• Post-crisis behavioral economics reduced Keynes to irrationality that disrupts general equilibrium. #expands (0.78) — Philip Mirowski, Never Let a Serious Crisis Go to Waste, 729