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Animal Spirits

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The New Palgrave Dictionary of Economics

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Abstract

The term ‘animal spirits’ is closely associated with John Maynard Keynes, who used it in his 1936 book, The General Theory of Employment Interest and Money, to capture the idea that aggregate economic activity might be driven in part by waves of optimism or pessimism (although Robin Mathews, 1984, p. 212, points out that Keynes would have been aware of its use by David Hume, 1739, pp. 60-1):

Most, probably, of our decisions to do something positive, the full consequences of which will be drawn out over many days to come, can only be taken as the result of animal spirits - a spontaneous urge to action rather than inaction, and not as the outcome of a weighted average of quantitative benefits multiplied by quantitative probabilities. (Keynes, 1936, pp. 161-2)

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Authors
  1. Roger E. A. Farmer
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Editor information

Steven N. Durlauf Lawrence E. Blume

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© 2008 Palgrave Macmillan, a division of Macmillan Publishers Limited

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Farmer, R.E.A. (2008). Animal Spirits. In: Durlauf, S.N., Blume, L.E. (eds) The New Palgrave Dictionary of Economics. Palgrave Macmillan, London. https://doi.org/10.1007/978-1-349-58802-2_43

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  • DOI: https://doi.org/10.1007/978-1-349-58802-2_43

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  • Publisher Name: Palgrave Macmillan, London

  • Print ISBN: 978-0-333-78676-5

  • Online ISBN: 978-1-349-58802-2

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