Readings: Narratives, Aging, Football Manager, etc.

The quality of ideas seems to play a minor role in mass movement leadership. What counts is the arrogant gesture, the complete disregard of the opinion of others, the singlehanded defiance of the world.

Eric Hoffer, The True Believer: Thoughts on the Nature of Mass Movements

Yale economist Bob Shiller’s new book “Narrative Economics” is weird. While he is a wide-ranging fellow, having wandered across real estate, markets, stocks, the good society, subprime, bubbles, and so on, he has mostly been the guy telling the (economic) truth about new things that people are excited about. In his new book, however, Shiller is the guy getting excited about an old thing people used to be excited about, but now mostly don’t talk about in nice company.

To be fair, being “viral” — the topic of Shiller’s new book — was ruined for me a long time ago. Specifically, I blame Hotmail, whose email tagline, added to all its users’ emails without their consent, was, venture-famously, “Get your free Email at Hotmail”, with the word “Hotmail” linked to the hotmail domain for easy signup. This was creepy, of course. Turning private emails into marketing messages is dodgy, but no-one cared, because it worked, and we were young and naive — and so it made Hotmail viral, got it bought by Microsoft, thus turning venture firm Draper Fisher Jurvetson into a well-known venture capital fund, and making Tim Draper and Steve Jurvetson into household names, at least in certain West Coast circles. Even if only for those last two reasons, being “viral” has a lot to answer for.

Shiller doesn’t talk about Hotmail in his new book — and for that, I thank him. I would buy more books if I knew for sure they didn’t talk about Hotmail. What he is interested in, however, is how things become viral, and what impact that has on the broader economy. Why, for example, did bitcoin become such a phenomenon? Shiller argues that one of the causal factors was the underlying story. Mysterious founder! Replacing old currencies!

I’m troubled by this. I like the book, and I take Shiller’s point — the story makes a big difference — but an economics over-reliant on narrative is the economics of what statistician Andrew Gelman calls “story time”. Too often analysis falls down this rabbit hole, like a newspaper story that opens with, say, two examples of something horrible but compelling that has happened, and then marches off into a connected series of what-ifs and what-abouts, none of which made plausible by the opening anecdotes. Narratives are, in a word, dangerous.

Does that mean we shouldn’t care why people believe the things they do? Not all all. Much more important, however, is how people convince others to believe things, often through implicit and explicit networks of information and misinformation. Much has been written on this topic, including the seminal work of Eric Hoffer on why masses come to believe things, and what the consequences are.

It is also instructive to model beliefs, especially how to believe things that only stand a passing chance of being true. I like to do this using modeling apps, like NetLogo, which is oodles of fun.

You can see how I modeled viral theorizing in the above settings I capture from NetLogo. I won’t go into it in-depth, but the gist is that viral theorizing — narratives — in my model are tied to education level, how dissatisfied people are, how credulous people are, and how easy it is for them to communicate. Increase their ability to communicate, lower their education, make them more credulous, etc., and they fall for the first narrative that comes along. Do the opposite, and narratives have a harder time.

The above is a screenshot of how the model finished. You can watch the full video here. In short, while people were resilience, and relatively highly educated, the amount of communication made it inevitable that many people fell for the narrative, even if only because so many people around them — literally or virtually — had already fallen for it. Narratives have eaten almost half the population.

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Here are some articles and papers worth reading: