Working Paper: NBER ID: w30605
Authors: Christopher D. Carroll; Tao Wang
Abstract: ‘Epidemiological’ models of belief formation put social interactions at their core; such models are widely used by scholars who are not economists to study the dynamics of beliefs in populations. We survey the literature in which economists attempting to model the consequences of beliefs about the future – ‘expectations’ – have employed a full-fledged epidemiological approach to explore an economic question. We draw connections to related work on ‘contagion,’ narrative economics, news/rumor spreading, and the spread of internet memes. A main theme of the paper is that a number of independent developments have recently converged to make epidemiological expectations (‘EE’) modeling more feasible and appealing than in the past.
Keywords: Epidemiological Models; Expectations; Social Interactions; Economic Behavior
JEL Codes: D81; D91; E71; G41
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| social interactions (Z13) | economic expectations (D84) |
| social interactions (Z13) | economic behavior (D22) |
| political affiliation (D72) | investment decisions (G11) |
| political affiliation (D72) | financial decision-making (G11) |
| consumer sentiment (D12) | investment decisions (G11) |