Creative innovations in finance and risk management based on human behavior.

Highlights

One of the most far-seeing political economists of our time, Robert J. Shiller is known the world over for his brilliant forecasts of financial bubbles and his penetrating insights into market dynamics and how human psychology drives the economy.

He has offered audiences unerring predictions of the last two bubble collapses and he continues to offer a road map for reversing the financial crisis we face today.

In his current book Animal Spirits: How Human Psychology Drives the Economy, and Why It Matters for Global Capitalism, he and coauthor George Akerlof give us fresh insights into how dangerous bubbles form and offer measures for preventing such crises in the future.

In his New York Times bestseller Irrational Exuberance, published in March 2000, he called the dotcom bubble for what it was and predicted the bubble’s collapse while everyone else was still cheering.

Similarly, his book, The Subprime Solution, explains the housing market's collapse and its broader impact, and proposes bold measures to solve the current crisis and the underlying economic weaknesses that made it possible.

Robert is a famously successful innovator in the emerging field of behavioral finance. He co-created the most widely quoted home price index in the country (the S&P/Case-Shiller Index) and is the author of a book—The New Financial Order—that offers truly creative and workable solutions to some of our greatest financial problems.

He also helped launch an active market in house-price futures and options on the Chicago Mercantile Exchange.

Dr. Shiller is the Arthur M. Okun Professor of Economics at the Cowles Foundation for Research and Economics, Yale University, and Professor of Finance and fellow at the International Center for Finance, Yale School of Management. He has strong connections to the securities industry.

He cofounded MacroMarkets LLC, which uses the Case-Shiller methodology to develop innovative financial instruments to facilitate investment and risk management.

He contributes regularly to the Economic View column of The New York Times and to Project Syndicate.

Robert Shiller is a strong presenter for audiences looking for inspiration and innovation in financial markets and financial services, and to understand the impact of financial crises on the social fabric.

Animal Spirits: How Human Psychology Drives the Economy, and Why It Matters for Global Capitalism

A road map for reversing the financial crisis and channeling the powerful forces of human psychology that create the bubbles and feed the panics.

The global financial crisis has made it painfully clear that powerful psychological forces are imperiling the wealth of nations today. From blind faith in ever-rising housing prices to plummeting confidence in capital markets, "animal spirits" are driving financial events worldwide. In this book, acclaimed economists George Akerlof and Robert Shiller challenge the economic wisdom that got us into this mess, and put forward a bold new vision that will transform economics and restore prosperity.

By recovering the idea of "animal spirits", John Maynard Keynes's term for the mood swings that drove the Great Depression and its subsequent recovery, Akerlof and Shiller reassert the necessity of an active role for government in economic policymaking. Because managing these animal spirits requires the steady hand of government; simply allowing markets to work won't do it.

Animal Spirits explains how fear and confidence, corruption and the other moods of the market affect the market's behavior, and how the conventional economics of the past have failed to account for them. More importantly, it offers a road map for reversing the financial misfortunes that beset us today.

Animal spirits can and sometimes do change direction. Confidence is a psychological phenomenon, and can make seemingly capricious jumps up as well as down.

What's the antidote?

What's the antidote to the mass delusion of financial bubbles? Robert Shiller sees information and innovation as the counter to group think. An active market in house-price futures and options—he helped launch such securities on the Chicago Mercantile Exchange—would let skeptical speculators prick housing bubbles. If banks wrote continuous-workout mortgages, in which the terms changed depending on house prices, unemployment and the like, homeowners might be less addicted to rising prices. If government subsidized financial advice for the nonrich, salespeople angling for commissions might be less influential.

The Subprime Solution

A plan to dramatically reduce our vulnerability to financial crises like the current subprime crisis would rest on two principles:

in the immediate short run, government and business leaders must deal with the problem created by the bubble and is aftermath. The ship is sinking, and we have to save it before we do anything else.

In the longer run, we need to develop stronger risk-management institutions to inhibit the growth of bubbles—the root cause of events such as the current subprime crisis—and to better enable the members of our society to insulate themselves against them when they do develop.

The Value

For audiences active in finance, real estate, insurance, globalization—any area beset with economic risk—who want to differentiate themselves in the market with breakthrough innovations, Robert Shiller offers custom-researched presentations that are full of fresh ideas and practical optimism, even inspiration. No one has more experience, greater success, or better ideas about the opportunities available for helping people deal with the risks that they worry about the most. As the co-creator of the country's most widely quoted housing price index and an unerring forecaster of both of the major bubbles of our generation, Robert is uniquely qualified to speak to your organization about how innovate and anticipate in today's economy.

Innovation in Finance and Markets

An innovation visionary. We are in the midst of an explosion of invention in financial products and instruments, driven mostly by advances in information technology, and Robert thinks this is just the beginning. He’s dedicated several chapters of his book, The New Financial Order, to creating new opportunities in finance and he’s started two successful companies to implement these ideas.

Practical experience. Robert also has been directly involved in financial innovation himself through two companies he helped to found that are implementing the ideas in his book. He co-developed the Case-Shiller Indexes (CSIs) that are now universally recognized as the most trustworthy and authoritative measures of change in home prices available. Another company applies the methodology behind the CSIs to a wide range of other nontraditional assets, including the housing market. He also helped create a market in house-price futures and options on the Chicago Mercantile Exchange as a way to provide market information that would help to minimize dangerous housing bubbles like the one we're experiencing now.

Bubbles & How Markets Work

Robert Shiller is the world’s greatest authority on bubbles. His prescient bestseller Irrational Exuberance predicted the collapse of the 1990s bubble before it happened. More importantly, Robert knows why it happened—no one understands market volatility and the psychology that drives market swings better. At the same time, he argues, bubbles are not the big bugaboo that they’re hyped up to be. This makes him especially valuable to pension-plan sponsors, endowment managers and anyone else that doesn’t want to get caught sitting on a speculative bubble when it bursts. The second edition of Irrational Exuberance covers other markets besides the stock market, including the current exuberant housing market. Following in this book's path, Robert's forthcoming book, The Subprime Solution, is essential reading for anyone who wants to understand how the current crisis evolved and what we can do to prevent future bubbles and protect our prosperity going forward.

Finance and IT—how technology drives innovation

Information technology has made it vastly easier and cheaper to create new financial products and to develop the electronic databases they require. At the same time, technology creates significant new risks to companies and individuals, because it’s evolving so rapidly and it’s so fundamentally important. Few people have plumbed the opportunities and dangers that the confluence of finance and IT has created as deeply as Robert Shiller.

Insurance—an inspirational field for innovation

We tend to think of insurance as a staid and even dismal industry to be in. Robert considers insurance as potentially the source of the most inspirational financial products imaginable. He focuses on saving real people from terrible personal disasters, real companies from corporate catastrophes, with cutting edge innovations that make real money. What could be more exciting? He will inspire audiences in this industry.

Credentials

• Arthur M. Okun Professor of Economics, Cowles Foundation for Research and Economics, Yale University
• Professor of Finance and fellow at the International Center for Finance, Yale School of Management
• Co-developer, S&P/Case-Shiller© Home Price Indices
• Cofounder, MacroMarkets LLC
• Fellow, International Center for Finance, Yale School of Management
• Regular contributor, Economic View column, The New York Times
• Research associate, National Bureau of Economic Research
• Fellow, American Academy of Arts and Sciences
• Fellow, Econometric Society
• Member of the Academic Advisory Panel for the Federal Reserve Bank of New York
• Recipient, Guggenheim Fellowship