Narrative and Institutional Economics

Abstract

This article addresses a range of questions associated with the occurrence of a new field of study - narrative economics, which is considered in the context of modern institutionalism. Pioneering works of R. Shiller, G. Akerlof, and D. Snower spotlighted the importance of analyzing narratives and narrative influence when studying economic processes. In this paper, a qualitative study of narratives is seen through the prism of an answer to the question: How do prescribed narratives influence institutions and change them?. Narratives have much in common with institutions since very often, explicitly or implicitly, they contain value judgments about social interactions or normative aspects shaping behavioral patterns. The identification of dominating narratives enables us to understand better how institutions influence economic (social) action. Repeated interactions among social actors are structured through understanding and learning the rules. Understanding of social rules comes from the language - we articulate and perceive the rules drawing on common narratives. Narratives and institutions are helpful when actors gain knowledge about various forms of social communication. Digital technologies, mass media, and social networking sites facilitate the spread of narratives, values, and beliefs; this process is characterized by increasing returns. Studying narratives and institutions is crucial for modern economic theory because it helps to improve qualitative and quantitative methods of analyzing empirical evidence and enables researchers to understand complex economic processes.