Podcast Summary: The Indicator from Planet Money

Episode: Can a good story change economic reality?
Date: January 14, 2026
Hosts: Waylon Wong & Ricky Mulvey
Guest: Daron Acemoglu (MIT professor, Nobel laureate)

Main Theme

This episode explores the concept of "narrative economics" — the idea that compelling stories and economic narratives, often spread by powerful individuals, can shape real-world economic outcomes as much as (or more than) hard data. Featuring Nobel laureate Daron Acemoglu, the discussion highlights how stories have fueled historic and current economic shifts, creating booms, busts, and affecting investment on a grand scale.

Key Discussion Points & Insights

1. Introduction to Narrative Economics (02:30–03:09)

• Traditionally, economics focused on data and hard numbers, but economist Robert Shiller argued that stories (“narratives”) are vital economic data because people make decisions based on them.
• Quote:
  "People don’t make decisions only with data. Stories really matter. In fact, these narratives are important economic data.” – Waylon Wong [02:32]

2. Power of Economic Narratives (03:10–03:50)

• Daron Acemoglu emphasizes that narratives influence coalitions, beliefs, and societal change.
• Narratives gain power through repetition by high-status individuals.
• Quote:
  "Ideas that are expressed, propagated, defended by high status people are more likely to become powerful ideas.” – Daron Acemoglu [03:55]

3. Truth vs. Power in Economics (04:03–04:21)

• Economic stories don’t have to be factual; as long as they're catchy and championed by influential people, they can drive decision-making.
• These narratives especially sway investor behavior.
• Quote:
  “These stories can be non factual. They may need a whiff of truth, but as long as someone powerful is spinning it and they sound good... these narratives can influence you.” – Waylon Wong [04:03]

4. Historical Case Study: The Suez Canal (04:31–06:13)

• Ferdinand de Lesseps, likened to a 19th-century Elon Musk, sold the Suez Canal project using grandiose narratives to attract public and governmental investment before the technology was proven.
• Lesseps tailored his story for each audience, e.g., promising “the name of the prince who opens the great maritime canal will be blessed from century to century until the end of time.” [04:53]
• The story succeeded, shareholders profited, and a technological breakthrough (advanced dredging) became a lucky break that made the project possible.

5. The Downside: From Suez to Panama (06:44–08:12)

• Lesseps tried to replicate his narrative for the Panama Canal, misrepresenting feasibility and ignoring significant challenges.
• The narrative again attracted investment but ultimately proved catastrophic, as geographical and engineering difficulties caused the project to fail under his leadership.
• Quote:
  “All of that came crumbling down because the narratives had raced ahead of reality and his designs couldn't work.” – Daron Acemoglu [07:44]

6. Lessons for Today (08:13–08:54)

• Big projects with strong narratives (like major infrastructures or tech revolutions) can reshape economies, but reality often lags behind the hype.
• Economic narratives can be right (“defy gravity for a time”) but eventually, reality asserts itself.
• Quote:
  “Economic narratives can change your reality. They can even defy gravity for a time...but eventually reality catches up.” – Waylon Wong [08:44]

7. Agency Over Narratives (08:54–09:14)

• Individuals have power to question and choose which narratives to believe, especially as similar stories reappear across economic history.
• Hosts share tongue-in-cheek favorite persistent narratives.
• Quotes:
  “Do you have a favorite economic narrative?” – Ricky Mulvey [09:03]
  “Tariffs are paid by the other country.” – Waylon Wong [09:04]
  “Tax cuts pay for themselves. We're going to ride that baby out.” – Ricky Mulvey [09:09]

Memorable Moments & Notable Quotes

• On how narratives spread:
  “Some of it is internal. They can be simple. They can be catchy, like a jingle. But ultimately, human society is built around status.” – Daron Acemoglu [03:38]
• On real-world impact:
  “The Suez and Panama Canals are good examples of economic narratives. We’re seeing today a big infrastructure buildout with huge financial and political consequences that may need a few lucky breaks.” – Waylon Wong [08:12]

Timestamps for Key Segments

| Time (MM:SS) | Segment | |--------------|------------------------------------------------------------------| | 00:22–01:07 | Introduction to the power of economic stories | | 02:30–03:02 | Robert Shiller and narrative economics | | 03:10–03:55 | How narratives gain power and why status matters | | 04:31–06:13 | Ferdinand de Lesseps and the Suez Canal narrative | | 06:44–08:12 | Failure of the Panama Canal venture | | 08:13–08:54 | Modern lessons: narratives vs. reality, adaptation over time | | 08:54–09:14 | Hosts’ favorite persistent economic narratives |

Podcast’s Closing Tone

The episode delivers serious insight with a wry and conversational tone—using historical analogies and quick banter to show that even the biggest economic shifts often begin as good stories told by influential people. The hosts and guest invite listeners to be more skeptical and intentional about the economic stories they choose to believe.