Can the Keynes notion of ‘spontaneous optimism’ help U.S. investments in clean energy?
This post originally appeared on the Great Energy Challenge blog, in partnership with National Geographic and Planet Forward.
John Maynard Keynes, a giant in modern economic theory, famously wrote, “Most, probably, of our decisions to do something positive, the full consequences of which will be drawn out over many days to come, can only be taken as the result of animal spirits.”
This notion, laid out in his seminal book, The General Theory of Employment Interest and Money, was meant to push back on the notion that people behave in an purely economically rational manner, that many of our decisions are based not solely on a cool weighting of probable costs and benefits, but also on “spontaneous optimism” to act.
So professionally, we’ve known at least since Keynes wrote this in 1936 that sentiment and gut instincts drive a lot of our decisions. Score one for common sense.
Practically, what this means is that if people feel bad about their economic prospects, that “spontaneous optimism” is likely to be absent. This is why, for example, many of us think the Recovery Act was so critical. Cutting ... Read more