If you’re interested in “how the world works” you’ll read about the financial crisis. I do. And if you’re like me that’s tricky business because as non-economists we rely on others for the facts.
So coming across Andrew Lo‘s Reading About the Financial Crisis: A 21-book Review was a positive surprise. Quoting from his introduction is the easiest way to show why I like his approach:
In Akira Kurosawa’s classic 1950 film Rashomon, an alleged rape and a murder are described in contradictory ways by four individuals who participated in various aspects of the crime. Despite the relatively clear set of facts presented by the different narrators—a woman’s loss of honor and her husband’s death—there is nothing clear about the interpretation of those facts. At the end of the film, we’re left with several mutually inconsistent narratives, none of which completely satisfies our need for redemption and closure….Six decades later, Kurosawa’s message of multiple truths couldn’t be more relevant as we sift through the wreckage of the worst financial crisis since the Great Depression. (p.1)
Only by collecting a diverse and often mutually contradictory set of narratives can we eventually develop a more complete understanding of the crisis. While facts can be verified or refuted—and we should do so expeditiously and relentlessly—we must also recognize the possibility that more complex truths are often in the eyes of the beholder. This fact of human cognition doesn’t necessarily imply that relativism is correct or desirable; not all truths are equally valid. But because the particular narrative that one adopts can color and influence the subsequent course of inquiry and debate, we should strive at the outset to entertain as many interpretations of the same set of objective facts as we can, and hope that a more nuanced and internally consistent understanding of the crisis emerges in the fullness of time. (p.4)
And then skipping to his conclusion (the reading you have to do yourself)
There are several observations to be made from the number and variety of narratives that the authors in this review have proffered. The most obvious is that there is still significant disagreement as to what the underlying causes of the crisis were, and even less agreement as to what to do about it. But what may be more disconcerting for most economists is the fact that we can’t even agree on all the facts. (p.31)
Apart from learning a lot about perspectives on the financial crisis and issues with various stories, this paper also ticked some other boxes in my long list of fancies: the art of reviewing, intellectual styles, and more broadly, the sociology of research. Be prepared for post on that.