Robert James “Bob” Shiller, an American Nobel Laureate economist, was born on March 29, 1946, in Detroit, United States. He did his bachelors in economics from the University of Michigan in 1967. Later in 1968 he did his master’s and Ph.D. in 1972, also in the field of economics from the Massachusetts Institute of Technology (MIT). He began his academic career as a lecturer at the University of Minnesota, the University of Pennsylvania, and MIT. In 1979, he was offered the post of a research associate at the National Bureau of Economic Research, where he had the task of predicting the official beginning and endings of recessions and economic expansions in the U.S.A. In 1982, he became a member of the economics faculty at Yale University.
Schiller’s researched several cases of overvaluation by investors, and termed it as “irrational exuberance”. His findings rejected the prevailing concept of market rationality developed by Fama in the 1960, and put forward the notion that financial markets are faced with rapid changes in price levels and fluctuating asset evaluations which he termed as “bubbles”. Shiller’s theory of bubbles was further strengthened when he accurately predicted the “bursting” of market bubbles in 2000, with the information-technology stocks and later in 2007, with real estate.
Robert Shiller is among the founders of the emerging field of behavioral economics, which aimed to apply the use of psychology and sociology to interpret economic behavior. He, along with Karl E. Case, created the S&P/Case-Shiller Home Price Index, which tracks changes in the average price of residential real estate in several major U.S. cities.
Shiller has made several notable contributions to the field of behavioral finance and macroeconomics through his writings. In 1989, he published Market Volatility, which provides a mathematical and behavioral interpretation of price fluctuations in speculative markets. In 1993, he published another book Macro Markets: Creating Institutions for Managing Society’s Largest Economic Risks which served to put forward several new risk-management contracts, including futures contracts in national incomes or securities based on real estate that helped millions of people increase their risk gearing abilities and improve their management skills and consequently improve their standards of living. His next book, Irrational Exuberance provided an in depth analysis of his theory of speculative bubbles, with reference to the workings of the stock market and real estate.
In 2003, his book The New Financial Order: Risk in the 21st Century provided a speculative analysis of the expanding role of finance, insurance, and public finance in our future. He wrote several other books including the Subprime Solution: How the Global Financial Crisis Happened and What to Do about It (2008), Animal Spirits: How Human Psychology Drives the Economy and Why It Matters for Global Capitalism (2009; coauthored with George A. Akerlof) and Finance and the Good Society (2012) that provide economists all over the world the chance to examine the housing and economic crisis, psychological debates on the economic needs off human beings and a plan of action to overcome economic hurdles.
Since 1991, Robert Shiller has served as co-organizer of NBER workshops on behavioral finance with Richard Thaler and also, from 1994-2007, he has worked with George Akerlof to further the study of behavioral economics with regards to macroeconomics and individual decision making. In 2005, he served as the Vice President of the American Economic Association. In 2006-7, he was the President of Eastern Economic Association. He has been elected as the President of the American Economic Association for 2016.
Robert Shiller was awarded the Nobel Prize in Economic Sciences jointly with Eugene Fama and Lars Peter Hansen in 2013. He regularly writes a column named “Finance in the 21st Century” for Project Syndicate and “Economic View“ for The New York Times.
Books by Robert Shiller
