Emotions and Economics

This chapter examines approaches to emotions in orthodox and various Keynesian-influenced economics, with regard to ‘interest’ and expectations, and compares it to sociological emotions research. First it shows how economics ignores ‘passions’ like greed or avarice by transmuting them to the allegedly more predictable, less emotional and completely ‘rational’ motives of interests. Interest, in contemporary orthodox accounts, is said basically to account for expectations but the accounts are derived from the Renaissance view that ‘interest will not lie’. In contrast, the less orthodox economic view argues that expectations are merely imagination and hope, however much data, expertise and information are used, and are thus far from predictable. The chapter then compares Keynesian concepts of emotions such as ‘animal spirits’ with sociological understandings of them. The contribution that emotions research can make to emotions in economic decision-making is then considered. Financial organizations, in particular, are obsessed with the future, hence the future-oriented emotions of confidence, optimism, pessimism, fear and trust are unavoidable, but this is an endlessly unlearned and regenerative process. Finally, the chapter touches on the policy implications of an alternative understanding of the typical emotions deployed in decision-making by financial organizations.