Robert J. Shiller, Sterling Professor of Economics and Professor of Finance, has been awarded the 2013 Nobel Prize in Economic Sciences, together with Eugene Fama and Lars Peter Hansen of the University of Chicago, "for their empirical analysis of asset prices."
The prize, officially called the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel, was awarded to the three scholars in recognition of research that showed that while the price of stocks and other assets cannot be predicted accurately in the very short term, more accurate predictions can be made over a period of years.
"If prices are nearly impossible to predict over days or weeks, then shouldn’t they be even harder to predict over several years?" read a press release from the Royal Swedish Academy of Sciences. "The answer is no, as Robert Shiller discovered in the early 1980s. He found that stock prices fluctuate much more than corporate dividends, and that the ratio of prices to dividends tends to fall when it is high, and to increase when it is low. This pattern holds not only for stocks, but also for bonds and other assets."
Educated at the University of Michigan and MIT, Shiller has taught at Yale since 1982. In addition to his work on financial markets, he is known for his writing on behavioral economics, speculative bubbles, and real estate, among other areas. His books include, most recently, Finance and the Good Society (2012), as well as Irrational Exuberance (2000), on bubbles; Subprime Solution: How the Global Financial Crisis Happened and What to Do about It (2008); and Animal Spirits: How Human Psychology Drives the Economy and Why It Matters for Global Capitalism (2009), written with George A. Akerlof. His home-price indices, developed with Karl E. Case and now published by Standard & Poor's, are widely cited.
Dean Snyder identifies Shiller as the founder of the field of behavioral finance and explains Shiller’s role in the life of Yale SOM and ICF. Watch the full press conference on YouTube.
Read the full award announcement on NobelPrize.org.
Read an interview with Robert Shiller on Yale Insights.
Read a discussion on Yale Insights between Robert Shiller and Jacob Hacker, Stanley B. Resor Professor of Political Science, on the risks of economic inequality.
View the Stock Market Confidence Indices, overseen by Robert Shiller and housed at Yale SOM's International Center for Finance.
Read about Yale SOM's Behavioral Finance Summer Program, an intensive course for doctoral students organized by Robert Shiller and Nicholas Barberis, Stephen and Camille Schramm Professor of Finance.