Analytic Narratives in Political Economy

Abstract

Analytic narratives combine rational choice theory—often extensive-form, game-theoretic models—and qualitative evidence to understand historical and institutional questions in political economy. This article begins by characterizing the features of analytic narratives that distinguish this method from others in economics and political science. Analytic narratives gained prominence in the 1990s as the result of several factors, including the development of game theory, a turn away from general equilibrium theorizing, and the increasing interest in institutions and economic history. Based on the initial responses and subsequent methodological debates, four criticisms of analytic narratives are discussed: those based on claims to originality, the value of rational choice theory, case studies and external validity, and the merits of qualitative evidence. As the article argues, differing disciplinary approaches and perspectives generated many of these criticisms. Nevertheless, from a methodological perspective, analytic narratives remain an effective and distinctive method for analyzing the political economy of institutions.