Keynes's Animal Spirits Vindicated: An Analysis of Recent Empirical and Neural Data on Money Illusion
Posted: 10 Oct 2017
Date Written: 2010
The tendency of people to think of money in nominal, rather than real, terms is now well documented by recent empirical data. In particular, experimental and neurobiological data provide new insights on the individual and subindividual (neurobiological processes) anchoring of money illusion. The sensitivity of the reward brain system to the nominal format of money may explain money illusion at a biological level and provide a sort of physical demonstration of Keynes animal spirits hypothesis. These findings make it more difficult to ignore the hedonic or emotional dimension of money, which lies outside the scope of homo economicus.
Keywords: animal spirits, experimental economics, money illusion, neuroeconomics, Keynes
JEL Classification: D87, E41, E71
Suggested Citation: Suggested Citation