Can a good story change economic reality?

Economic narratives—contagious stories that spread through society—function as powerful data points that drive financial decisions and institutional change. While traditional economics relies on hard numbers, Nobel laureates Robert Shiller and Daron Acemoglu argue that simple, catchy stories propagated by high-status individuals often outweigh objective facts in influencing market behavior. The historical trajectory of Ferdinand de Lesseps illustrates this phenomenon; his persuasive "19th-century Elon Musk" persona successfully secured funding for the Suez Canal by selling a vision that outpaced existing technology. However, the subsequent failure of his Panama Canal project demonstrates that while narratives can "defy gravity" and attract massive investment through status and charisma, they eventually collapse when they diverge too far from physical and economic reality. Ultimately, these stories shape everything from AI investment cycles to trade policy, requiring participants to distinguish between aspirational persuasion and sustainable economic truth.