Robert J. Shiller is one of the most influential economists of our time. He is a Sterling Professor of Economics at Yale University, a co-founder and chief economist of MacroMarkets LLC, and a Nobel Prize winner in 2013. He is also a prolific author, columnist, and speaker, who has made significant contributions to the fields of financial economics, behavioural finance, and macroeconomics.

In this blog post on Zatrun.com, we will explore some of the highlights of Robert J. Shiller’s career, works, and insights, and why he is considered a leading authority on topics such as market bubbles, irrational exuberance, narrative economics, and animal spirits.

Who is Robert J. Schiller?

Robert J. Shiller was born in Detroit, Michigan, in 1946. He graduated from the University of Michigan with a BA in economics in 1967, and obtained his PhD in economics from the Massachusetts Institute of Technology in 1972. His doctoral advisor was Franco Modigliani, another Nobel laureate in economics.

Shiller joined the faculty of Yale University in 1982, where he has taught ever since. He is also affiliated with the National Bureau of Economic Research (NBER), the American Economic Association (AEA), and the Eastern Economic Association (EEA).

Robert J. Shiller has received numerous awards and honors for his academic achievements, including the Deutsche Bank Prize in Financial Economics in 2009, and the Nobel Memorial Prize in Economic Sciences in 2013, which he shared with Eugene Fama and Lars Peter Hansen for their empirical analysis of asset prices.

His Most Notable Works

• Irrational Exuberance (2000): In this book, Robert J. Shiller warned of the dangers of speculative bubbles in the stock market and the housing market and predicted their eventual collapse. He also coined the term “irrational exuberance” to describe the psychological factors that drive investors to overvalue assets. The book was updated in 2005 and 2015 to reflect new developments and data.
• The New Financial Order (2003): In this book, Shiller proposed a series of innovative financial instruments and institutions that could help reduce inequality, risk, and volatility in the global economy. Some of his ideas include income-linked loans, macro markets, social security personal accounts, inequality insurance, and democratic finance.
• Animal Spirits (2009): In this book, co-authored with George Akerlof, Shiller argued that human psychology and emotions play a crucial role in driving economic behaviour and outcomes. They identified five key “animal spirits” that affect economic decisions: confidence, fairness, corruption, money illusion, and stories. They also advocated for a more active role of government intervention to stabilize the economy and promote social welfare.
• The Subprime Solution (2008): In this book, Shiller analysed the causes and consequences of the subprime mortgage crisis that triggered the global financial crisis of 2007-2008. He also suggested some policy reforms to prevent future crises and restore trust in the financial system. Some of his recommendations include expanding financial literacy education, creating new markets for hedging housing risk, regulating financial innovation, and strengthening international cooperation.
• Narrative Economics (2019): In this book, Robert J. Shiller explored how stories and narratives shape economic behaviour and events. He argued that narratives can spread like viruses through social networks and media platforms, and influence people’s expectations, beliefs, emotions, and actions. He also proposed some methods and tools for studying narrative economics empirically and theoretically.

Shiller’s Insights

Robert J. Shiller is widely regarded as one of the pioneers and leaders of behavioural finance, a field that combines insights from psychology and economics to explain how human behaviour affects financial markets and decisions. He has challenged some of the conventional assumptions of rationality and efficiency that underlie modern finance theory, and demonstrated how psychological biases, social influences, and cultural factors can cause market anomalies, inefficiencies, bubbles, crashes, and crises.

Shiller has also been a vocal advocate for democratizing finance and making it more accessible, transparent, fair, and inclusive for all people. He has proposed various ways to improve financial education, innovation, regulation, and participation to enhance social welfare and economic stability.

Robert J. Shiller is not only an academic economist but also a public intellectual who has engaged with diverse audiences through his books, columns, lectures, podcasts, and interviews. He has been a frequent contributor to The New York Times, Project Syndicate, and other media outlets, where he has shared his views on current economic issues.