Robert J. Shiller, SM ’68, PhD ’72, an economics professor at Yale known for his work on the long-term fluctuations of asset prices in markets, shared the 2013 Nobel Prize in economic sciences with Eugene F. Fama and Lars Peter Hansen, both of the University of Chicago. The Royal Swedish Academy of Sciences announced that it was honoring the three economists “for their empirical analysis of asset prices.”
The academy cited Shiller’s work, dating to the early 1980s, showing that stock prices are not as tightly linked to future dividends as the previous theory had held but can become rapidly inflated. However, Shiller found, such swings in the market also lend themselves to a level of long-term predictability, since market corrections tend to ensue.
Shiller found that this principle applies to bond prices as well, and he has subsequently become well known among the public for using this approach to analyze the housing market.
As an economist, Shiller has also engaged the public sphere to a notable degree, writing widely read books for general audiences, including Irrational Exuberance (2000) and Animal Spirits (2009), coauthored with George Akerlof, PhD ‘66. He also helped develop the Case-Shiller home price indices, data analysis tools for the housing market.
Shiller is the 80th Nobel laureate with a connection to MIT and one of 10 MIT alumni who have won the economics prize.
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