Robert Shiller’s Presidential Address to the AEA (2017) deals with “Narrative Economics,” defined as:
“By narrative economics I mean the study of the spread and dynamics of popular narratives, the stories, particularly those of human interest and emotion, and how these change through time, to understand economic fluctuations.”
(NB: A good definition of narrative economics would not contain that same word within the definition….)
“The human brain has always been highly tuned towards narratives, whether factual or not, to justify ongoing actions, even such basic actions as spending and investing. Stories motivate and connect activities to deeply felt values and needs. Narratives “go viral” and spread far, even worldwide, with economic impact.”
Shiller’s contribution is to analyze this issue quantitatively. I haven’t read the whole thing, but I do note that he cites Adam Smith only once and not for reason of narrative per se.
Smith spent much time explaining how literature and the arts are important narrative vehicles, the main ways in which we learn about ethics. For more, see: “Adam Smith’s Ethics and the ‘Noble’ Arts, Review of Social Economy, Vol. 64(2)(2006): 155-180.
The humanities create narratives about economic experiences (both true and false) and it is exciting that someone of Shiller’s stature is exploring them. But note that he is dealing with narratives at arm’s length—only as objects of study. A companion story would be to discern which of these narratives most deeply engages us and best captures something that is true, or close to the truth, than others.