There are at least two ways of approaching a literary work of art from the standpoint of psychology: first, by simply analyzing the characters through their words and actions as real people; and second, by treating the work as a dream turned inside out, in which each character is a facet, or refraction, of the dreamer's personality. The virtue of the second approach is that it objectifies the action to the degree that it is easier to treat the problem on a social rather than on an exclusively personal level. Outside of therapeutic analysis the aim of a psychological approach to art should not be to read the mind of the artist, but to read the work of art as a societal dream; not as personal pathology, but as social pathology.

The second approach is also more profitable in certain works that are manifestly dream-oriented on a societal level—such works, for example, as Faust II, Ibsen's late plays, Strindberg's expressionist works, and Albee's Tiny Alice.