The more we learn about how people really think, the more we must rethink economic theory.

Changes in fundamental beliefs play a major role in the fluctuations of the economy. That’s the implication of two fascinating new studies that show how people systematically change their beliefs in thinking about the financial future. At the moment, the knowledge that economists have accumulated about this subject suggests that we should have a high degree of humility — not only in forecasting where we are going, but in describing where we have been.

In a 2018 paper, Julian Kozlowski of the Federal Reserve Bank of St. Louis, Laura Veldkamp of Columbia University and Venky Venkateswaran of New York University attribute some of the economic pain that occurred after the 2008 financial crisis to a change in beliefs that may still be playing a role 10 years later.

Before financial tremors began to be felt in 2006, practically no one viewed a crisis of the magnitude of the Great Depression as being remotely possible, these authors say. The financial crisis changed that perspective, and people have continued to worry about this newly discovered threat, with the result that risk-taking has been inhibited and government-controlled interest rates — so-called riskless rates — have remained relatively low.

The scholars show that after an outlier event like the 2008 financial crisis occurs, standard statistical techniques show a sudden and persistent increase in the probability that such an event will occur again.