While economists can measure the past, they cannot always predict what will cause a downturn on the market. Economist Robert J. Shiller takes a look at the other factor that plays a huge part in determining shifts in the economy, the narratives that people spread among each other.
Global recessions are typically sudden and surprise most people; narratives an individual hears reduces their motivation to spend money. The Great Depression exemplifies a sudden recession in which the warning of economists helped to make consumers weary but information from other channels played an important role as well:
Back then, immediately after the market crash, church sermons were a powerful influence. Congregations were told that many business people had behaved like gamblers and hucksters. Through these sermons and other word-of-mouth sources, moralizing about the stock market crash spread, affecting mass psychology.