Tuning Into 'Animal Spirits'

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Executive Summary

Animal spirits, a term coined by economist John Maynard Keynes, refers to a sense of consumer trust and confidence, Shiller said. The term also suggests an awareness of fairness, corruption and faith. Shiller, whose book, Animal Spirits: How Human Psychology Drives the Economy, and Why it Matters for Global Capitalism was published in February, argues that the current economy is suffering from a suppression of animal spirits. On an individual level, consumers may feel that they are making a rational choice not to spend money, he noted. Collectively, however, such decisions communicate a lack of trust in the economy. "Emotion is contagious among people," Shiller said.

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