Robert Shiller COVER STORY
The human touch In his new book, Robert Shiller argues that finance must harness its power for the greater good By AMY HIESTAND
Connections Staff Writer
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few years ago, near the peak of the financial crisis that crippled the U.S. economy, Robert Shiller began work on a book to give his students at Yale some perspective. Most were preparing for careers in finance, and public fury toward the profession was fierce. “It was in reaction to the intense public anger,” said the worldrenowned economist and New York Times best-selling author about what prompted him to write his tenth book. “(By then) I had been teaching introductory finance at Yale for 25 years, training young people to go into the financial professions. I wanted to put the financial sector into a good perspective for them, in light of what it achieves for society as well as the problems it presents. I wanted to develop a moral basis for business activity and regulations of it.” The resulting book, “Finance and the Good Society,” publishing in April, will be the topic of Shiller’s presentation that month as part of the library’s Thinking Allowed series co-sponsored by Princeton University Press. In the book, Shiller acknowledges the serious errors on the part of the financial industry that led to the current crisis. But he also points to past contributions — the creation of insurance, mortgages, savings accounts and pensions — that have benefitted society. He envisions a future where financial leaders work together to harness the sector’s great potential to solve some of the world’s worst problems and where they work together toward innovation that promotes the common good.
Robert Shiller in his office at Yale University. He speaks at the library on April 26.
The common good was clearly low on the list of priorities for those whose greed was the root of the 2008 economic meltdown we’re still reeling from today. So does Shiller really think the worst elements of human behavior can be overcome by the industry going forward? “The challenge is to redesign our financial system to make these immutable aspects of human nature less of a problem,” Shiller said. “As I say in the book, we must ‘humanize’ finance.” While a financial system that benefits people across
the socioeconomic spectrum sounds promising, many unemployed and underemployed have given up hope that the economy will recover and allow them to regain a standard of living they once took for granted. “The recovery may be slow, and furthermore we were already undergoing a transition to a globalized information economy that makes some rich and ignores some equally capable people who are not positioned right for success,” Shiller said when asked what he would say to them. “Our society has to face the fact
of such trends. I talk in the book about what governments can do, and how young people can make career choices that serve them and society well.” Known for being ahead of the curve for his predictions of both the stock market bubble of 2000 and the real estate bubble that led up to the subprime mortgage meltdown, Shiller is the Arthur M. Okun Professor of Economics, Department of Economics and Cowles Foundation for Research in Economics, Yale University, and professor of finance and fellow at the International Center for Finance, Yale School of Management. He received his bachelor’s from the University of Michigan in 1967 and his doctorate in economics from the Massachusetts Institute of Technology in 1972. He has written on financial markets, financial innovation, behavioral economics, macroeconomics, real estate, statistical methods, and on public attitudes, opinions, and moral judgments regarding markets. Shiller’s repeat-sales home price indices, developed originally with Karl E. Case, are now published as the Standard & Poor’s/Case Shiller Home Price Indices. The Chicago Mercantile Exchange now maintains futures markets based on these indices. He also writes a regular column, “Finance in the 21st Century,” for Project Syndicate, which publishes around the world, and “Economic View” for The New York Times. Shiller intends to gear his April presentation toward a broad audience. “This is not going to be an esoteric talk about finance,” he said, “but a talk that should be relevant to everyone since we all have to live under financial capitalism.” Author Robert Shiller “Finance and the Good Society” April 26, 7 p.m. Part of the Thinking Allowed Series co-sponsored by the library and Princeton University Press. Other authors in the series are Andrew Delbanco (“College: What it Was, Is and Should Be”) on April 24 and James L. Gould and Carol Grant Gould (“Nature’s Compass: The Mystery of Animal Navigation”) on May 22. Details in the calendar.
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