I was shocked, absolutely shocked, to find that Tyler Cowen's excellent TEDxMidAtlantic talk on stories had not yet been transcribed. It generated a lot of discussion in the thread about it where it was first introduced, so I went ahead and transcribed it. I added hyperlinks to background information where I thought it was due. Here you go:

Host: In normal times, a blog written by an economist might not get that much attention, but our next presenter's blog, called Marginal Revolution, is quite popular, and he writes a column for the New York Times called the Economic Scene, here to explain the world to us in terms of the Great Recession and beyond, is Tyler Cowen.

Cowen: I was told to come here and tell you all stories, but what I'd like to do is instead tell you why I'm suspicious of stories, why stories make me nervous. In fact, the more inspired a story makes me feel, very often the more nervous I get. So the best stories are often the trickiest ones. The good and bad things about stories is they're a kind of filter. They take a lot of information, and they leave some of it out, and they keep some of it in. But the thing about this filter, it always leaves the same things in. You're always left with the same few stories. There's the old saying, just about every story can be summed up as, "A stranger came to town." There's a book by Christopher Booker, he claims there are really just seven types of stories. There's monster, rags to riches, quest, voyage and return, comedy, tragedy, rebirth. You don't have to agree with that list exactly, but the point is this: if you think in terms of stories, you're telling yourself the same things over and over again.

There was a study done, we asked some people to describe their lives. And when asked to describe their lives, what's interesting is how few people said, "mess". It's probably the best answer; I don't mean that in a bad way. "Mess" can be liberating, "mess" can be empowering, "mess" can be a way of drawing upon multiple strengths. But what people wanted to say was, "My life is a journey." 51% wanted to turn his or her life into a story. 11% said, "My life is a battle." Again, that's a kind of story. 8% said, "My life is a novel," 5% "My life is a play." I don't think anyone said, "My life is a reality TV show." Again, we're imposing order on the mess we observe, and it's taking the same patterns, and when something is in the form of a story, often we remember it when we shouldn't. So how many of you know the story about George Washington and the cherry tree. It's not obvious that's exactly what happened. The story of Paul Revere, it's not obvious that that's exactly the way it happened. So again, we should be suspicious of stories. We're biologically programmed to respond to them. They contain a lot of information. They have social power. They connect us to other people. So they're like a kind of candy that we're fed when we consume political information, when we read novels. When we read nonfiction books, we're really being fed stories. Nonfiction is, in a sense, the new fiction. The book may happen to say true things, but everything's taking the same form of these stories.

So what are the problems of relying too heavily on stories? You view your life like "this" instead of the mess that it is or it ought to be. But more specifically, I think of a few major problems when we think too much in terms of narrative. First, narratives tend to be too simple. The point of a narrative is to strip it way, not just into 18 minutes, but most narratives you could present in a sentence or two. So when you strip away detail, you tend to tell stories in terms of good vs. evil, whether it's a story about your own life or a story about politics. Now, some things actually are good vs. evil. We all know this, right? But I think, as a general rule, we're too inclined to tell the good vs. evil story. As a simple rule of thumb, just imagine every time you're telling a good vs. evil story, you're basically lowering your IQ by ten points or more. If you just adopt that as a kind of inner mental habit, it's, in my view, one way to get a lot smarter pretty quickly. You don't have to read any books. Just imagine yourself pressing a button every time you tell the good vs. evil story, and by pressing that button you're lowering your IQ by ten points or more.

Another set of stories that are popular - if you know Oliver Stone movies or Michael Moore movies. You can't make a movie and say, "It was all a big accident." No, it has to be a conspiracy, people plotting together, because a story is about intention. A story is not about spontaneous order or complex human institutions which are the product of human action but not of human design. No, a story is about evil people plotting together. So you hear stories about plots, or even stories about good people plotting things together, just like when you're watching movies. This, again, is reason to be suspicious. As a good rule of thumb, "When I hear a story, when should I be especially suspicious?" If you hear a story and you think, "Wow, that would make a great movie!" That's when the "uh-oh" reaction should pop in a bit more, and you should start thinking more in terms of how the whole thing is maybe a bit of a mess. Another common story or storyline - the claim that we "have to get tough". You hear this in so many contexts. "We have to get tough with the banks." "We had to get tough with the labor unions." "We need to get tough with some other country, some foreign dictator, someone we're negotiating with." Now, again, the point is not against getting tough. Sometimes we should get tough. That we got tough with the Nazis was a good thing. But this is a story we fall back upon all too readily. When we don't really know why something happened, we blame someone, and we say, "We need to get tough with them!" as if it had never occurred to your predecessor this idea of getting tough. I view it usually as a kind of mental laziness. It's a simple story you tell. "We need to get tough, we needed to get tough, we will have to get tough." Usually, that's a kind of warning signal.

Another kind of problem with stories is, you can only fit so many stories into your mind at once or in the course of a day, or even in the course of a lifetime. So your stories are serving too many purposes. For instance, just to get out of bed in the morning, you tell yourself the story that your job is really important, what you're doing is really important, and maybe it is, but I tell myself that story even when it's not. And you know what? That story works. It gets me out of bed. It's a kind of self-deception, but the problem comes when I need to change that story. The whole point of the story is that I grab onto it and I hold it, and it gets me out of bed. So when I'm really doing something that is a waste of time, in my mess of a life, I'm too tied into my story that got me out of bed, and ideally I ought to have some kind of complex story map in my mind, with combinatorials and a matrix of computation, and the like. But that's not how stories work. Stories, to work, have to be simple, easily grasped, easily told to others, easily remembered. So stories will serve dual and conflicting purposes, and very often they will lead us astray. I used to think I was within the camp of economists, I was one of the good guys, and I was allied with other good guys, and we were fighting the ideas of the bad guys. I used to think that! And probably, I was wrong! Maybe sometimes, I'm one of the good guys, but on some issues, I finally realized, "Hey, I wasn't one of the good guys." I'm not sure I was the bad guys in the sense of having evil intent, but it was very hard for me to get away with that story.

One interesting thing about cognitive biases - they're the subject of so many books these days. There's the Nudge book, the Sway book, the Blink book, like the one-title book, all about the ways in which we screw up. And there are so many ways, but what I find interesting is that none of these books identify what, to me, is the single, central, most important way we screw up, and that is, we tell ourselves too many stories, or we are too easily seduced by stories. And why don't these books tell us that? It's because the books themselves are all about stories. The more of these books you read, you're learning about some of your biases, but you're making some of your other biases essentially worse. So the books themselves are part of your cognitive bias. Often, people buy them as a kind of talisman, like "I bought this book. I won't be Predictably Irrational." It's like people want to hear the worst, so psychologically, they can prepare for it or defend against it. It's why there's such a market for pessimism. But to think that buying the book gets you somewhere, that's maybe the bigger fallacy. It's just like the evidence that shows the most dangerous people are those that have been taught some financial literacy. They're the ones who go out and make the worst mistakes. It's the people that realize, "I don't know anything at all," that end up doing pretty well.

A third problem with stories is that outsiders manipulate us using stories, and we all like to think advertising only works on the other guy, but that's not how it is. Advertising works on all of us, so if you're too attached to stories, what will happen is people selling products come along, and they will bundle their product with a story. You're like, "Hey, a free story," and you end up buying the product, because the product and the story go together. And if you think about how capitalism works, there's a bias here. Let's consider two kinds of stories about cars. Story A is, "Buy this car, and you will have beautiful, romantic partners and a fascinating life." There are a lot of people who have a financial incentive to promote that story. But say the alternative story is, "You don't actually need a car as nice as your income would indicate. What you usually do is look at what your peers do and copy them. That's a good heuristic for a lot of problems, but when it comes to cars, just buy a Toyota." Maybe Toyota has an incentive there, but even Toyota's making money off the luxury cars, and less money off the cheaper cars. So if you think which set of stories you end up hearing, you end up hearing the glamor stories, the seductive stories, and again I'm telling you, don't trust them. They're people using your love of stories to manipulate you. Pull back and say, "What are the messages, and what are the stories that no one has an incentive to tell?" and start telling yourself those, and see if any of your decisions change. That's one simple way - you can never get out of the pattern of thinking in terms of stories, but you can improve the extent to which you think in stories and make some better decisions.

So if I'm thinking about this talk, I'm wondering, of course, what is it you take away from this talk? What story do you take away from Tyler Cowen? One story you might take away is the story of the quest. "Tyler came here, and he told us not to think so much in terms of stories." That would be a story you could tell about this talk. It would fit a pretty well-known pattern. You might remember it. You could tell it to other people. "This weird guy came, and he said not to think in terms of stories. Let me tell you what happened today!" and you tell your story. Another possibility is you might tell a story of rebirth.  You might say, "I used to think too much in terms of stories, but then I heard Tyler Cowen, and now I think less in terms of stories!" That too, is a narrative you will remember, you can tell to other people, and it may stick. You also could tell a story of deep tragedy. "This guy Tyler Cowen came and he told us not to think in terms of stories, but all he could do was tell us stories about how other people think too much in terms of stories." So, today, which one is it? Quest, rebirth, tragedy? or maybe some combination of the three? I'm really not sure, and I'm not here to tell you to burn your DVD player and throw out your Tolstoy. To think in terms of stories is fundamentally human. There's a Gabriel García Márquez memoir, Living to Tell the Tale, that we use stories to make sense of what we've done, to give meaning to our lives, to establish connections with other people. None of this will go away, should go away, or can go away. But as an economist, I'm thinking about life on the margin. The extra decision: should we think more in terms of stories, or less in terms of stories? When we hear stories, should we be more suspicious? and what kind of stories should we be suspicious of? Again, I'm telling you it's the stories that you like the most, that you find the most rewarding, the most inspiring. The stories that don't focus on opportunity cost, or the complex, unintended consequences of human action, because that very often does not make for a good story. So often a story is of triumph, of struggle; there are opposing forces, which are either evil or ignorant; there is a person on a quest, someone making a voyage, and a stranger coming to town. And those are your categories, but don't let them make you too happy.

So as an alternative, at the margin (again, no burning of Tolstoy), just be a little more messy. If I actually had to live those journeys and quests and battles, that would be so oppressive to me! It's like, my goodness, can't I just have my life in its messy, ordinary - I hesitate to use the word - glory? It's fun for me - do I really have to follow some kind of narrative? Can't I just live? So be more with comfortable with messy. Be more comfortable with agnostic, and I mean this about the things that make you feel good. It's so easy to pick a few areas you're agnostic in, and then feel good about like, "I'm agnostic about religion, or politics." It's a kind of portfolio move you make to be more dogmatic elsewhere, right? Sometimes, the most intellectually trustworthy people are the ones who pick one area, and they're totally dogmatic in that. So pig-headedly unreasonable you think, "How can they possibly believe that!?" But it soaks up their stubbornness, and then on other things, they can be pretty open-minded. So don't fall into the trap of thinking because you're agnostic on somethings, that you're being fundamentally reasonable about your self-deception and your stories and your open-mindedness.

This idea of hovering, of epistemological hovering, and messiness, and incompleteness, and not everything ties up into a neat bow, and you're really not on a journey here. You're here for some messy reason or reasons, and maybe you don't know what it is, and maybe I don't know what it is, but anyway I'm happy to be invited, and thank you all for listening.

[audience applause]

By the time I got to the line, "throw out your Tolstoy," I had written "story" so many times that I accidentally wrote, "throw out your Tolstory".