Shiller, Robert James (1946–…), an American economist, won the 2013 Nobel Prize in economic sciences . He shared the award with the American economists Eugene F. Fama and Lars Peter Hansen . The men received the award for their research into how financial markets work and how prices for such assets as stocks (representing shares in ownership of a company) and houses are set. Their research suggests that changes in the prices of assets are difficult to predict in the short term. However, movements of asset prices can be more easily predicted over longer periods, such as three to five years. In some areas of research, their individual theories have conflicted.
Fama established the theory that markets are _efficient—_that is, they are good at quickly incorporating new information into the price of an asset. His research concluded that changes to the price of these assets cannot be predicted in the short term. Shiller focused on long-term price trends. After studying human psychology and decision making, he determined that markets are not always rational and that, at times, assets can be mispriced. With economist Karl E. Case, Shiller helped develop a set of economic tools for measuring the housing market. These tools are now known as the S&P ( Standard & Poor’s )/Case-Shiller Home Price Indices. They are extensively used for tracking changes in housing prices.
Shiller is noted for warning in the mid-2000’s about a “bubble” of inflated housing prices. The abrupt drop in prices beginning in 2007 severely damaged the housing market in the United States and contributed to the worst financial crisis since the Great Depression of the 1930’s. Shiller also predicted the plunge in prices of stocks related to Internet businesses that occurred in the early 2000’s.
Shiller was born in Detroit on March 29, 1946. He earned a bachelor’s degree in economics from the University of Michigan in 1967. He received a master’s degree in economics in 1968 and a doctorate in economics in 1972, both from the Massachusetts Institute of Technology (MIT). Shiller began his teaching career at the University of Minnesota as an assistant professor from 1972 to 1974. He then taught economics at the University of Pennsylvania in Philadelphia from 1974 to 1982. Shiller became a professor of economics at Yale University in 1982. He has published many books and papers on such subjects as the financial markets, behavioral economics, and real estate.
