Novels and the microfoundations of economics

V.S. Pritchett once wrote about the novelist’s knack of “showing how people live in one another’s lives.” This is not only a concise way of talking about what novelists do – it also points to a large economic fact, which is that people do live in one another’s lives. Surprisingly, economists are, for the most part, blind, or at least hesitant, about seeing this fact. They have even systematized this blindness and called it the ‘micro-foundations of the economy.’

Narrenschiff – Georg Grosz

Unfortunately, all too often novels, when they are considered from the aspect of economics, are considered to be free zones over which preconceived economic theories and ideas roam. But one can think of two other relations of the novel to economics – one is as a test of economic ideas, and the other is as a source of economic ideas. It might well be that the social interactions involving exchange, the symbolization of value, gifts, scarcity  – are rehearsed in a sophisticated way in certain novels to the extent that the economist should learn from the novel, rather than the other way around.

Roger Gathmann
Roger Gathmann

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