Understanding the Great Financial Crisis

[UPDATE AUGUST 2020: Scott Sumner and Kevin Erdmann published their joint paper, Housing Policy, Monetary Policy, and the Great Recession.]

Humans learn best through stories. Using stories, we can avoid a balanced view of the evidence. In fact, we can stop looking for new evidence once we have found the evidence that best fits our preferred narrative. So the best storytellers own the market in understanding the world, but they are usually the wrong people to understand a problem in the first place. Those who write books and give talks onstage are contest…