Yale’s Nobel Laureate Robert Shiller answers seven questions.
7 Questions With Yale’s Nobel Laureate Robert Shiller
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The Nobel Prize was a big event in my life. Maybe it led to a change in my research. Since 2013 I’ve been mostly working on the idea of what I call narrative economics that economic events are caused more than most economists think by rumors stories narratives we call them. Their stories with a moral or with a interpretation and ideas that are contagious spread through stories from person to person and change their economic behavior.
I had heard rumors that I might say I wasn’t. It wasn’t a complete surprise. I was getting out of the shower in the morning of early in the morning trying to leave for a trip and I get this phone ringing. I almost didn’t answer but I thought well it could possibly be the Nobel people. And sure enough they were. It was it was big. One thing I did was normally a no no. I went upstairs and woke my wife up. She doesn’t like to be away. I think under these circumstances I did it. So that’s how big it was.
It was a big moment for me.
A lot of people wonder of course where the markets are going and the stock market too high or is the housing market too high. Are interest rates going somewhere economists develop theories but usually they’re theories of rational man reacting to an environment that’s changing.
My thought is that it’s usually not that it’s usually the people are changing and this is what I call narrative economics.
Shortly after I won the Nobel Prize I was elected president of the American Economic Association which is the professional organization for economists.
And I decided to reform my presidential address to give some reform ideas for economics that led me to this narrative economics theme that economists have to listen to people more.
They don’t want to do that.
They want to talk in abstract terms. But now we know with online data we have newspapers magazines books diaries sermons we have all these communications between people that are now digitized. I think we can change our research and become more focused on how people think and why that changes through time. My book Narrative economics which I expect to be published in 2019. That book has a lot of stories. They’re not my stories there stories that I’ve discovered were popular at times of economic turmoil and typically we’ve forgotten the story. If you ask about say the Great Depression we have our own story about the Great Depression in the 1930s is remembered by everyone and we have our own ideas about it but those aren’t the same ideas people back then have people then were exceptionally afraid of robots. OK. Believe it or not automation they didn’t use the word automation the word they like most was technological unemployment machines that replace jobs. And they thought that the high unemployment in the Great Depression was because machines were replacing jobs. Now you may look at that and say wait a minute that’s what we’re.