Robert J. Shiller
Who was Robert J. Shiller?
Nobel laureate: Nobel Prize in Economic Sciences (2013)
Biographical data adapted from Wikipedia’s article on Robert J. Shiller (CC BY-SA 4.0).
Biography
Robert James Shiller was born on March 29, 1946, in Detroit, Michigan. He went to Southfield High School, then attended Kalamazoo College. He furthered his studies at the University of Michigan and the Massachusetts Institute of Technology. This educational path set him up for a long and impactful career in economics, changing how people understand financial markets.
Shiller is a Sterling Professor of Economics at Yale University and is a fellow at the Yale School of Management's International Center for Finance. He has been deeply involved in research, including working with the National Bureau of Economic Research since 1980. He has also held leadership roles, serving as vice president of the American Economic Association in 2005, president in 2016, and president of the Eastern Economic Association from 2006 to 2007. Outside of academia, he co-founded and is the chief economist of the investment management firm MacroMarkets LLC.
Shiller's work has changed economic thought in four key areas. He co-developed the Case-Shiller housing price index, a tool that assesses home values based on recent sales of similar houses. He challenged the Efficient Market Hypothesis, showing through statistical analysis that U.S. stock market volatility was greater than expected if real returns were steady. He also co-created the Cyclically-Adjusted Price-Earnings ratio, which uses a ten-year average of inflation-adjusted earnings to even out business cycle effects on market values. He became well-known for warning about asset bubbles in both stock and housing markets.
His predictions about bubbles were highly accurate. In 2003, he co-wrote a paper for the Brookings Institution questioning if there was a bubble in the housing market, and by 2005, he warned of possible large market declines that could lead to a global recession. His article in the Wall Street Journal in August 2006 noted the risk of a recession, and his warnings in September 2007 came almost exactly a year before the financial crisis. These observations established him as one of the most insightful commentators on market behavior and financial instability.
Before Fame
Growing up in Detroit during the post-World War II economic boom, Shiller saw the changes in American manufacturing and urban development up close. His education from Southfield High School to Kalamazoo College, the University of Michigan, and finally MIT shows the growing opportunities for academic progress in the 1960s and early 1970s.
The economic ups and downs of the 1970s, including stagflation and oil crises, created a situation where traditional economic models were being questioned. This time of economic uncertainty and the rise of behavioral psychology as a respected field set the stage for Shiller's later work questioning conventional ideas about rational markets and efficient pricing.
Key Achievements
- Nobel Prize in Economic Sciences (2013) for empirical analysis of asset prices
- Co-development of the Case-Shiller housing price index, now a standard industry benchmark
- Creation of the Cyclically-Adjusted Price-Earnings ratio (CAPE) for market valuation
- Successful prediction of the 2008 financial crisis and housing market collapse
- Challenge to the Efficient Market Hypothesis through statistical demonstration of excess market volatility
Did You Know?
- 01.He was named a Clarivate Citation Laureate in 2012, one year before actually winning the Nobel Prize
- 02.The Case-Shiller housing index he co-developed is now used as the basis for housing futures contracts traded on the Chicago Mercantile Exchange
- 03.He received an honorary doctorate from Paris Dauphine University in 2010, recognizing his international influence in financial economics
- 04.His CAPE ratio showed the stock market was overvalued before both the dot-com crash and the 2008 financial crisis
- 05.He became a Fellow of the Econometric Society in 1980, the same year he began his long association with the National Bureau of Economic Research
Awards & Honors
| Award | Year | Details |
|---|---|---|
| Nobel Prize in Economic Sciences | 2013 | for their empirical analysis of asset prices |
| Guggenheim Fellowship | — | — |
| Deutsche Bank Prize in Financial Economics | 2009 | — |
| Fellow of the Econometric Society | 1980 | — |
| Fellow of the American Academy of Arts and Sciences | — | — |
| Clarivate Citation Laureates | 2012 | — |
| Global Economy Prize | 2018 | — |
| honorary doctor of Paris Dauphine University | 2010 | — |