Narrative Economics: A Systematic Literature Review

Over the last few years, scholars in economics have come to acknowledge that stories and shared beliefs can shape economic outcomes just as strongly as data or policy measures. This idea is central to the concept of “Narrative Economics”. The approach emphasizes how narratives - compelling stories circulated through media, politics, and everyday discourse - can guide consumer choices, investment behavior, and even the trajectory of financial crises. Instead of dismissing these narratives as mere background noise, narrative economics views them as contagious phenomena, capable of spreading like epidemics, reshaping expectations, and driving real economic change. Gaining insight into such narratives is therefore essential for interpreting historical economic developments and anticipating future trends. The article addresses three research questions (RQ). According to RQ 1, the paper finds that behavioral economics has its focus on individual decision-making behavior and cognitive biases, while narrative economics is focusing on the social impact of collective narratives and storytelling. In accordance with RQ 2, the paper derives five research areas of narrative economics based on a systematic literature review between 2017 and 2025: macroeconomic effects of narratives, specific narrative themes, brain and behavior-related influence of narratives, narrative effects on the financial market, and the impact of narratives on economic theory. Related to RQ 3, the article determines to what extent narrative economics is integrated into economic theory up to now or how narrative economics can improve the understanding of the complexity of economic processes.