Shiller, Robert J. 1946-
SHILLER, Robert J. 1946-
PERSONAL: Born March 29, 1946, in Detroit, MI; son of Benjamin P. (an engineer) and Ruth (Radsville) Shiller; married Virginia Faulstich (a psychologist), June 13, 1976; children: Benjamin R., Derek C. Education: University of Michigan, B.A., 1967; Massachusetts Institute of Technology, S.M., 1968, Ph.D., 1972.
ADDRESSES: Home—201 Everit St., New Haven, CT 06511. Office—Cowles Foundation, Yale University, 30 Hillhouse Ave., New Haven, CT 06520, and Cowles Foundation, Box 208281, New Haven, CT 06511-8281. E-mail—[email protected]
CAREER: Yale University, Cowles Foundation, New Haven, CT, Stanley B. Resor Professor of Economics; Case Shiller Weiss, Inc. (economics research and information firm), cofounder; Macro Securities Research, LLC (a securities firm), cofounder; serves on Academic Advisory Panel, Federal Reserve Bank of New York, writer.
MEMBER: American Philosophical Society.
AWARDS, HONORS: Research Associate, National Bureau of Economic Research; American Academy of Arts and Sciences fellow; Econometric Society fellow; Guggenheim fellow, 1991; Paul A. Samuelson Award, TIAA-CREF, 1996, for Macro Markets; Common Fund Prize, 2000, for Irrational Exuberance; Financial Times/get Abstract Business Book Award, 2003, for The New Financial Order.
Market Volatility, MIT Press (Cambridge, MA), 1989.
Irrational Exuberance, Princeton University Press (Princeton, NJ), 2000.
The New Financial Order: Risk in the 21st Century, Princeton University Press (Princeton, NJ), 2003.
(With Alan S. Blinder) The Quiet Revolution, Yale University Press (New Haven, CT), 2004.
Contributor of articles to journals. Shiller's books have been translated into other languages, including Arabic, Chinese, Spanish, French, German, Greek, Hungarian, Italian, Korean, Japanese, Macedonian, Portuguese, and Spanish.
SIDELIGHTS: Robert J. Shiller is a well-known economics guru, professor, and the cofounder of several businesses. Since 1989 he has published a handful of volumes about his macro-economic theories and economic prescriptions. Market volatility is a favorite topic, one that he treats in the early title Market Volatility, a collection of essays on asset price volatility and related subjects. In it Shiller deals with such topics as models, the real estate and stock and bond markets, the aggregate economy, and investor behavior. About this work, Peter S. Spiro noted in Financial Analyst's Journal: "Shiller is a powerful critic of the rational expectations model, but he is less successful in coming up with useful alternatives to it." Another subject of enduring interest for Shiller has been risk management and the creation of new tools to minimize risk, the focus of his title Macro Markets: Creating Institutions for Managing Society's Largest Economic Risks. "Shiller's enthusiasm for market creation is extraordinary," wrote Christopher Bliss in Economic Journal. "He provides detailed discussion of the technical problems in defining and maintaining markets for the spreading of major economic risks, an area for which this work will become a major reference. Index number problems are discussed in a masterly fashion, and the role of perpetual futures markets is clarified."
Shiller has long been interested in determining the factors involved in investor decision-making, and in Irrational Exuberance he "describes this work in layman's terms and presents a clear exposition of the psychological and often irrational influences in financial markets," to quote Wall Street Journal reviewer Burton G. Malkeil. Shiller maintains that the stock market boom that began in 1982 and accelerated dramatically after 1995 is a speculative bubble that resulted from psychological rather than financial factors. In part one of the book, Shiller discusses the twelve financial factors that appear to have precipitated the bubble, while in part two he looks at the three psychological factors. Shiller and the publisher rushed to get the book finished and to press before the bubble burst. The book elicited many comments, and Shiller's main contention that the stock market would level out was eventually proven true.
Among the book's enthusiasts was an Economist reviewer, who called it "first-rate" and "compulsory reading for anybody interested in Wall Street or financially exposed to it," and Library Journal's Lawrence R. Maxted, who dubbed it "a counterweight to the plethora of get-rich-quick investment guides." In the American Journal of Economics and Sociology, a commentator noted that "Shiller has produced an excellent and at parts quite eloquent tract for our times," while Choice's W. S. Curran recommended "this thought-provoking and sobering book." In the New York Times Book Review, Louis Uchitelle had this to say about the work: "Shiller ranges widely in his explanations, laying them out in the first 168 pages in easy-to-read, sometimes passionate prose…. Those first 168 pages are must reading for anyone with savings invested in stocks. Just internalizing Shiller's explanations of why we speculate is probably the best antidote of all." When the paperback edition of Irrational Exuberance was issued in 2001, a Business Week reviewer noted that although the study "may seem less compelling now than when it came out, … [it] remains provocative."
Not all critics were so laudatory, however. Science book reviewer Rene M. Stulz found "the book's principal shortcoming" to be that at times Shiller "sounds as if he believes that the only important determinants of market price levels are emotions." Moreover, the Economist critic would like to have seen Shiller discuss directly the notions of economists who believe the market is not overvalued. Uchitelle also noted that the "last three chapters bog down in a discussion of the proper value of stocks—only an economist could love it—and in Shiller's solutions, which have to be taken on faith." On a more positive note, John Ellis wrote in Fast Company, "No one built the case [about a self-inflated bubble], point by point, with anything approaching Shiller's thoroughness. And only Shiller found a way to make economics and business accessible, compelling, understandable—human. Shiller's writing and analysis made the book a tour de force. Timing made it a best-seller."
In another best-selling title, The New Financial Order: Risk in the 21st Century, Shiller, focusing on the volatility of the stock market, discusses six fundamental ideas for using financial theory and modern technology to minimize financial risk. These methods entail the creation of new insurance tools to insure against previously uninsurable things, such as depreciation of property value, increases in unemployment, or lower-than-expected income. In the opinion of James A. Hayes of Business Economics, "The weakness and strength, respectively, of the The New Financial Order are that it is an excellent, relatively comprehensive vision of how to design six potential instruments of the first-generation new financial order, without a draft blueprint for launching it." Many of Shiller's ideas are so new as to make at least one critic, David R. Henderson of the Wall Street Journal, uncomfortable contemplating them, particularly for the Orwellian aspects of the supervision necessary to make them a reality. "Mr. Shiller himself is doubtful that all his ideas will be adopted," commented an Economist reviewer. "But his book, which contains some fascinating history, is at the very least thought-provoking."
BIOGRAPHICAL AND CRITICAL SOURCES:
American Journal of Economics and Sociology, July, 2000, review of Irrational Exuberance, p. 537.
Barron's, May 22, 2000, "The New Dr. Doom," pp. 37-40.
Business Courier Serving Cincinnati-Northern Kentucky, May 19, 2000, Declan O'Sullivan, "Current Hiccup Aside, Market Remains Sound," review of Irrational Exuberance, p. 31.
Business Economics, July, 2003, James A. Hayes, review of The New Financial Order, pp. 74-77.
Business Week, April 3, 2000, "He's Not Just a Bear—He's a Grizzly," review of Irrational Exuberance, p. 20; May 29, 2000, "Is 'Irrational' Exuberance Perfectly Rational?," p. 172; July 2, 2001, "Pack the Swimsuits—and the Paperbacks," review of Irrational Exuberance, p. 21; April 14, 2003, Peter Coy, "Limiting the Risk—and Pain—of Capitalism," review of The New Financial Order, p. 14.
CFO, The Magazine for Senior Financial Executives, October, 2000, "Start Making Sense," p. 112; January, 2001, Nikos Valance, "Bright Minds, Big Theories," review of Irrational Exuberance, p. 64.
Challenge, May-June, 1995, Greg Hill, review of Macro Markets, p. 124.
Choice, October, 1990, W. S. Curran, review of Market Volatility; November, 1994, E. Kacapyr, review of Macro Markets, p. 505; July, 2000, Curran, review of Irrational Exuberance, p. 2024; September, 2003, J. M. Nowakowski, review of The New Financial Order.
Economica, May, 1991, Kenneth D. West, review of Market Volatility, pp. 269-270; May, 1995, N. Gregory Mankiw, review of Macro Markets, pp. 270-272.
Economic Journal, November, 1995, Christopher Bliss, review of Macro Markets, pp. 1679-1681.
Economic Record, September, 2000, Robert Brooks, review of Irrational Exuberance, p. 311.
Economist (US), March 25, 2000, "Bubble, Bubble," review of Irrational Exuberance, p. 84; April 19, 2003, "Robert Shiller's Awfully Big Idea; Political Economy," review of The New Financial Order, p. NA.
Fast Company, September, 2001, John Ellis, "Robert Shiller Wrote the Defining Book on the Internet Bible: Irrational Exuberance. Now He's Busy Rewriting the Laws of Economics, Where Emotion and Psychology Dominate Data and Numbers," review of The New Financial Order, p. 118.
Financial Analysts Journal, September-October, 1990, Peter S. Spiro, review of Market Volatility, p. 80.
Fortune, September 28, 1998, Kim Clark, "Has Robert Shiller Finally Got It Right?," pp. 42-43.
Futures, May, 1997, Howard Simons, review of Macro Markets.
Futurist, September-October, 2003, review of The New Financial Order, p. 61.
Journal of Economic Literature, December, 1991, A. W. Kleidon, review of Market Volatility; September, 1995, Kenneth D. West, review of Macro Markets.
Journal of Finance, December, 1990, Stephen L. LeRoy, review of Market Volatility, pp. 1721-1723.
Journal of Financial Research, spring, 2001, Jennifer S. Conrad, review of Irrational Exuberance, p. 158.
Latin Trade, August, 2003, Andres Hernandez Alende, review of The New Financial Order, pp. 54-55.
Library Journal, April 15, 2000, Lawrence R. Maxted, review of Irrational Exuberance, p. 102; March 15, 2003, Carol J. Elsen, review of The New Financial Order, p. 92.
Marketing, July 13, 2000, Andrew Seth, review of Irrational Exuberance, p. 23.
Money June 1, 2001, Jason Zweig, "Reading Them for the Right Reasons," review of Irrational Exuberance, p. 40C.
New Yorker, March 27, 2000, John Cassidy, review of Irrational Exuberance, pp. 122-126.
New York Times Book Review, May 7, 2000, Louis Uchitelle, "Why Speculate?," review of Irrational Exuberance, p. 38.
Pensions Week, April 7, 2003, review of New Financial Order, p. NA.
Publishers Weekly, March 3, 2003, review of The New Financial Order, p. 66.
Science, June 30, 2000, Rene M. Stulz, review of Irrational Exuberance, p. 2323.
Southern Economic Journal, July, 1991, Kashi Nath Tiwari, review of Market Volatility, pp. 304-306.
Wall Street Journal, April 4, 2000, Burton G. Malkeil, "Where Logic Ends and Speculation Begins," review of Irrational Exuberance, p. A.24; April 24, 2003, David R. Henderson, "One Way of Insuring the Risky Business Life," review of New Financial Order, section D, p. 10.*