Nobel Prize Conversations

”Pursuing of expertise doggedly can’t be the goal for everyone because being specialised means losing some breadth of understanding. We need both kinds of people”

In this podcast episode recorded in 2014 economist Robert Shiller speaks about technology and the role he thinks it will have in the future. He also shares his best advice for young economists and what he thinks about teaching online courses to large audiences. Together with the Nobel Prize’s Adam Smith, they also discuss stage fright, and how to overcome it.

Listen as we take you back to this conversation with Shiller, recorded in 2014 as part of the series ‘Nobel Prize talks’. The host of this podcast is nobelprize.org’s Adam Smith, joined by Clare Brilliant.

Below you find a transcript of the podcast interview. The transcript was created using speech recognition software. While it has been reviewed by human transcribers, it may contain errors.

Clare Brilliant: Welcome to Nobel Prize Conversations. We’ve gone back to the archives for this episode. I’m Clare Brilliant. I’m here with our host Adam Smith. Who are we going to hear from today, Adam?  

Adam Smith: Clare, today it’s 2013 laureate in economic sciences, Robert Shiller.  

Brilliant: How long ago was this conversation with Robert recorded?  

Smith: I spoke to him in 2014, just the year after he’d been awarded the prize.  

Brilliant: Why have we picked this episode to come back to you now? 

Smith: It’s particularly interesting to hear how he speaks about technology. He’s really worried by it and also excited by it. He keeps referring to it throughout the episode. It’s just fascinating to hear him speak about it, me ask about it, and to realise just how fast things have moved.  

Brilliant: I completely agree. He mentioned so many different things, Google Glass being one of them… 

Smith: …which nobody would have heard of that anymore. And also, he speaks about not having to be in the same place.  

Brilliant: Teaching groups of students online, it all seems quite new the way it was talked about 10 years ago.  

Smith: Yeah. We’ve all sadly got rather used to that, but it was all new then. A lot’s changed in that time. The episode starts with him just returned from Davos, where technology was very much on his mind. Let’s drop in there. 

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Robert Shiller: Hello. 

Smith: You are just back from Davos, is that right? 

Shiller: Yes. It’s a great. It’s my 12th. I’ve always enjoyed them. 

Smith: So does it change it attending as a new laureate in the economic sciences? 

Shiller: A lot of things have changed. What really amazes me is people wanting to take their picture with me. I never had that before and at Davos, I had people standing in line to do that. I couldn’t believe it. 

Smith: What is it that you like so much about Davos if you’ve been 12 times in a row? 

Shiller: It seems to me that I know Davos, the World Economic Forum, is controversial, but it seems that Klaus Schwab, who’s the genius behind this annual conference, brings together people in business and government and some academics who are socially involved, care about people. Believe it or not, there are even billionaires who care about people. He invites them, but he doesn’t particularly, or he or his organisation, doesn’t particularly emphasise them. But people with, often with power or people who’ve published ideas and or in introduced legislation. They seem to be from so many different walks of life that I like to interact with them. I learn from them.  

Smith: What do you think the secret of its success has been? Because it’s become a very influential meeting. 

Shiller: I think it’s run well. I think it’s been going for many years and influence rises if you consistently fulfill some objective. I don’t fully understand why things are, why certain institutions have the prestige they do, but it seems to be not unwarranted. 

Smith: Yes. I suppose one could ask the same questions of the Nobel Foundation and its prizes. There must be a temptation at Davos to speak about so many things. There’s so much going on, and you are probably being asked right, left, and center for comment on things. How do you resist the temptation to comment on things that are, so to speak, beyond one’s sphere of competence? 

Shiller: This is a tension in modern society. We admire people who have expertise and know what they’re talking about. Unfortunately, pursuing of expertise doggedly can’t be the goal for everyone because being specialised means losing some breadth of understanding. We need both kinds of people. Davos is for broad thinking. We need the researchers who will focus in. It’s just there’s a problem that we can’t, the human minds at this stage in history, are still separate, and they still can’t pool all of their knowledge effectively. We have to work around that as best we can. 

Smith: I like the idea of, “at this stage in history” as separate. Do you foresee a time when that situation improves? 

Shiller: One thing that struck me about Davos is that I thought there was greater urgency. Now, maybe this is just where I went and who I heard, but there’s greater urgency about the potential problems for our society and our economy of artificial intelligence broadly construed. I tried on Google Glass for the first time as someone said ‘have a beer and try them on’. What made me think, wow, I think we’ll be wearing these, maybe I’m wrong but I can see that they would be addictive. Your everyday activities are going to be affected by new technology in the most transforming way. It is frightening. It was that sense of fear that I thought I detected at the latest Davos, and I detected all over the place, not just at Davos. Everyone’s worried just in the last few years, we have phones that like Siri on iPhone or others. You can talk to your phone, there’s nobody there. It answers you, something is changing that is profound, and I think has profound implications for our society. 

Smith: Just getting back to that theme of specialisation versus breadth. How do you individually cope with that? Because I suppose conferring Nobel Prize status on you adds to people’s desire to hear you comment on things, on all nature of things. How do you deal with it? 

Shiller: I think to some extent it’s a lifecycle thing. Younger people specialise. Then as they get older, they get broader. It’s natural. Some highly specialised research that might’ve attracted me when I was in my twenties. I don’t think realistically I’m going to do them now.  

Smith: Yes.  

Shiller: But I think maybe I’m trying to be part of a society that and trying to contribute what I can. Maybe it is true with age comes wisdom. At least we want to hope so. I should perhaps be more broad, but on the other hand, you are right that there comes a risk that you end up talking fluff. Things that everybody already knows. That’s the criticism that some people make of Davos, by the way. Everyone has to deal with these issues. They’re fundamental issues in our society. 

Smith: As you say, it’s a tension. One wants to get engaged in things. How far can you go? 

Shiller: I see that in my students. I think when I teach a class, if I get too technical and narrow, I’ll lose some students and they’ll not care anymore. But if I go the other way and I become too generalised, they’ll think I already know this. This is too broad. 

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Smith: Have you found yourself increasingly wanting to get engaged with bigger and bigger audiences as you go through your career? 

Shiller: It’s happened, I think I’ve overcome stage fright substantially. 

Smith: Did you ever suffer from stage fright? 

Shiller: I remember in high school, I had something memorised, and I got up in front of the whole class to recite it, and I just couldn’t remember it. It was a panicky feeling. It was just my class. I’m beyond that now. When I was a child, my mother told me not to value celebrities. That they’re mostly fake and they have publicity managers. I’ve had a certain contempt ever since for celebrity status. That means I don’t exactly value large audiences. At least I have mixed feelings about it. 

Smith: Understood. But at the same time, you’d like to be speaking to a bigger audience. For instance, you have a column. You have a regular column. 

Shiller: Yes, I have two of them.  

Smith: So that indicates that you want to say something to an audience who are very much outside the academic sphere. 

Shiller: Why do I do these things? I don’t know exactly. I was on the student newspaper in my college, so I have a journalistic side. I could go either way. I think the directions you take in life are somewhat random. I was invited to give these newspaper columns. I didn’t approach them with the idea. Then it may have reflected my mood at the time, or a frustration with the progress of macroeconomics, which I was teaching, and a sense that maybe I could be more productive with a broad picture. But I don’t know, I never really went one way or the other. Sorry, I do both of these things.  

Smith: That’s… 

Shiller: Maybe it’s a joint product, that’s a term economists use. Certain kinds of productive activities benefit by being done together, like the family farm. You have chickens, and you have cows, and you also have wheat growing in the fields. The theory was that those activities work well together because they fill up different available time slots for your work. Similarly there’s the idea of a modern university that combines teaching and research based on a theory of education that Humboldt gave, ‘Bildung durch Forschung’ I think in German, ‘Education through Research’. That works. I think for a research scientist, it’s actually productive not to just stay in the lab all the time, but to take some time out and talk with young people about what you do, and talk in much more general terms than your current lab experience. Now, I guess I thought writing a newspaper column is like that. It’s teaching, it’s another kind of teaching, I suppose, but it just makes me think more broadly. I thought I would be more productive doing that. I also do public speaking to different kinds of audiences. Every time I speak to a different kind of audience, I reassess things from their point of view as part of my preparation. I imagine, what are they going to think of this topic? Then I actually hear from them. It seems to me to be productive. You can narrowly focus and you can close yourself into a room and just think, and you’ll come up with something that may be very intricate. But the question is, will it be right? 

Smith: Another sort of outreach you do is you’re involved in is new models of education. You’re teaching these online courses through Coursera to vast numbers of students who are not enrolled in the university, but are following the courses online. Tell me a bit about that. 

Shiller: I’ve actually done this several times, not through Coursera, through Yale.  

Smith: Yes.  

Shiller: I’m now starting with Coursera. Why do I do this? I was invited. One thing about creativity I’ve learned over the years, when someone thinks that you’d be the perfect person for some task, take it seriously because they often know something. When they want to pair you up with someone else – matchmakers – I think that also matters. I think that often you end up paired with someone very good. Good in the sense that you mesh well. The other thing about it, to me, it was kind of an experiment, because I think it’s like a step into the future through the online learning. I’m just wondering where this is going, and like everyone else, I have worries about it.  

Smith: Yes.  

Shiller: Is it replacing people? My Coursera course currently has 101,000 students signed up. I’m thinking that’s a lot of classes.  

Smith: Yes.  

Shiller: Am I contributing to the unemployment of other teachers? 

Smith: Where are these people coming from? Where are these 101,000 students coming from?   

Shiller: It seems to be all over the world, judging from emails I get. I’ve read studies that unfortunately it’s not as tilted as you might think toward poor underdeveloped countries. It tends to be the developed countries, and it tends often to be older people who already have college degrees. I’m thinking that perhaps I should try to reach out a little bit more toward the developing world. I don’t know if I can get these people. Those are the people who need it the most. 

Smith: But I suppose it starts somewhere. I suppose you are using the internet to make teaching available, and it will grow. Is this the future of education? Does it in some ways, talking of redundancy of teachers? Does it make in any way, do you think universities redundant in the future? Can it all be done online? How do you see it evolving? 

Shiller: I wish we had answers to these things. I don’t know. I don’t see how anyone can know. I think that the artificial intelligence, and I’m using the grandiose term for it. But generally, computers are going to change our society in the coming centuries, just profoundly. It’s going to matter. It’s going to be life or death. I hope that we have a community spirit so that people who are left behind in this rush to modernity won’t be hurt too much. I’m afraid for the future but now it’s not obvious what online learning is going to do, because we don’t even know what the future computer configurations will be. I’m kind of thinking that one likely outcome is that it won’t be MOOC, massive open online courses. That’s what I’m doing with so many students. I’m thinking, and I don’t know this, but that people will still want to have a personal relation with a real human being. Therefore the form will be different. It won’t be massive. It will be it just like having a class by Skype or some kind of communications device. You still have a small class. It’s still a teacher in the class. We don’t have to be in the same room anymore. I don’t know if you call that online, but maybe that’s where it will go. I’m a little bit sceptical that MOOCs will really take over because it lacks the human interaction. It’s too one-sided.  

Smith: Absolutely. If one thinks back to all the conversations I’ve had with Nobel Prize laureates, most of them will talk animatedly about individual interactions they’ve had with mentors and colleagues in the past that have meant a very great deal to the way they’ve developed as thinkers. That individual interaction with people who can guide and lead one along the right path, stimulate one, seems to be absolutely key. This sort of learning where it’s mass distribution of information to people without the personal contact completely avoids that sort of that chance interaction. 

Shiller: Yes. I’m thinking that’s probably valid for I’m guessing for our lifetimes or the lifetimes of our children. But eventually, who knows? Do you know this book by Ray Kurtzweil called The Age of Spiritual Machines? When I first saw that book, I thought it was a little bit far out, but now I start to worry that he might be right. He’s claiming that our computers will get so good at talking to us, that we’ll start to think that they have a soul. We’ll start to think that they’re our best friends, and we don’t need people anymore. I worry about that. Though, I’m guessing it’s not in our lifetimes. 

Smith: But what a thought. Asking someone who was the mentor in your past? I’ll say it was this computer I was talking to. Just one more question about teaching. How do you teach a 101,000 students? How do you prepare your material for such a diverse group that you know so little about? 

Shiller: I prepare it as if they were my own students. I’m thinking that my students come from all over the world. They tend to come from privileged families. I think I try to avoid US-centric talking. It’s something that has always bothered me, that Americans think that we’re the only country that matters. It’s just not true. I still fall into that trap somewhat, though. It’s hard not to because I live here, but I try not to. I don’t know what else I can do. I don’t see the 101,000 students. I see my students in my class, and I know how they react. 

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Smith: Switching gear a bit. I wanted to ask about within economics, what is the appeal of the study of the financial markets? 

Shiller: I’ve always been fascinated by financial markets, going back to my graduate school days. Why is that? Because I think they’re kind of a infrastructure of some complexity that guides our economic decisions. It affects our society, our civilisation in ways that are not always good, but on balance are probably good. People around the world are embracing financial capitalism, more so over the last 30 years and rejecting collectivist or extreme socialist solutions. Why is that? I think because modern financial capitalism, while it can be cruel and hurtful at times, seems to bring prosperity and great diversity of outcomes. When I say finance is about just changing the wording a little bit, finance is about financing activities. What does it mean to finance an activity? Most things that people want to do require groups of people working together as part of organisations. The organisations have to have resources that they need. People have to be incentivised to pursue the goals of the organisation beyond their personal goals. It has to be something that lasts for a long time to work effectively. We just mentioned the Nobel Foundation, which is a nonprofit financial entity. We mentioned the World Economic Forum, another nonprofit financial entity. Finance is not really about making money. It’s about achieving activities. They have to be financed. That’s what Alfred Nobel did. He just financed it. 

Smith: That’s a very positive view of finance. It’s not perhaps the view that a large section of the world’s population hold of the financial institutions. How do you go about, if you like, painting the financial institutions in a different light? 

Shiller: I’m not saying that Alfred Nobel is typical of founders of financial institutions. He is a bright light in the field. But it’s not perfect. I view our financial institutions as dealing with the imperfections of people. We’re not all saints. I like to point out that 3% of the population in the world are psychopaths. We have people of all sorts. We have a system that allows place for competition, allows people to express themselves without hurting anybody, hopefully, and as constructively as possible. We’d rather not put the psychopaths in the mental institution. We’d like to have something that channels their activities in a productive way. That’s what we have. So people who are in charge of financial institutions are not always nice guys. But they’re there.  

Smith: Yes.  

Shiller: They’re doing much better than they might have in a different system.   

Smith: So basically working to improve financial institutions is a task that is not just desirable, but absolutely necessary in your view. For you, what sustains you in your work, would you say? 

Shiller: It seems to me that when economists are most productive, it’s usually when they suggest improvements to our institutions. Unfortunately, it’s a frustrating task because there’s a lot of inertia in our institutions, and we have vested interests for the present institutions who don’t want them changed. 

Smith: One thing that the mention of financial institutions often conjures up for people is income inequality. I know that’s something you think strongly about.  

Shiller: Yes. People have a very basic sense of justice and fairness. My recent book was called Finance and the Good Society. What is the good society? I think that’s a term that has been used to define and describe a society of people who are basically caring. Maybe they’re mostly out for themselves, but they’ll pick up a sharp object on the street before it hurts somebody. We take it almost for granted that there’s a basic human feeling that we’re part of society that cares about other people. But the problem is that finance does seem selfish, especially when you have people trading against each other. We have a game that looks very unfriendly, but it still goes by certain rules. After the game, it’s like in any game, the players can all get together and be friends again, that’s the vision. But it doesn’t always look nice. Remember there are some people who are not motivated in a human way as we’d like. 

Smith: But as we currently have it, we have increasing incoming inequality in many places. It’s presumably in some ways the financial market’s job to try and help alleviate that. 

Shiller: Now that’s one point that I’ve been trying to stress that finance is substantially about risk management. If risk management is pursued correctly, it reduces inequality. We have institutions of insurance, for example. What they do is prevent inequality from occurring because of any of the insured events. This is a powerful force removing inequality. As time goes on, insurance can become more and more comprehensive in dealing with risk that people face. I think that it does help reduce inequality. It focuses on risks that people are concerned about and care about. It produces a plan to deal with those risks as they happen. That’s part of finance. Portfolio management is another example that variations in portfolios in people’s investments create inequality. As we improve our ability to manage those, we lower inequality. Now, that’s not the whole story, but I’ve been arguing that these financial techniques could be applied much more broadly and help reduce inequality even more. I don’t think we can get rid of it completely, because some level of inequality is necessary to provide incentive. There still have to be penalties for failure or for lack of enterprise, lack of work. So that there will be some inequality at all times.  

Smith: Some, but the magnitude we have is extreme. Do you think there’s enough attention paid to that? 

Shiller: My feeling is that there should be attention, especially for the future, that inequality has been getting worse. If you extrapolate those trends the next 10, 20, 30, 40, 50 years, as our children grow up, it’s going to get maybe awful. I think that we can at least have a plan. There is no plan to deal with this. I’ve been advocating that countries should legislate automatic changes in the tax structure in the future, that will kick in automatically if inequality gets much worse. That’s an idea. It would reframe the discussion if they could possibly do that. 

Smith: Because presumably one can’t really be satisfied with a world where there are such disparities between rich and poor. 

Shiller: I think even the rich don’t want it. Would you like to be a multi-billionaire amongst starving people? I wouldn’t be happy. See, the funny thing about inequality is that some people are thinking that most nice people don’t even try to get rich. Most people don’t try. They take some job, like something that helps people. In extreme cases, it would be idealistic jobs like teaching, school teachers or nurses. They do this because they naturally like people. They feel a little bit annoyed when some people who don’t seem to share their social feeling use some very aggressive things to get rich. I can see that we don’t want a society that rewards that kind of behaviour too heavily. We can allow some of that. But I think it’s okay to have billionaires, but let’s not make it too extreme. I was looking at a list of countries by their gini coefficients, which is a measure of inequality, and was struck that Sweden on the list that I looked at, was the most equal country in the world. I thought that’s where I just was with the Nobel thing. But it didn’t seem so equal because I had dinner with a King and his family. I’ve never experienced that anywhere else in the world. I thought, in a sense, what the Swedes are doing, I can’t speak for them, but my guess is that their king and queen are hardworking people who are providing a certain kind of entertainment and meaning. It’s not inequality, but it’s fun to look at rich people within limits. I had a great time. The dinner was very memorable. A society that was too equal would just get boring. 

Smith: Yes. Although you were taught by your parents not to think too much of celebrities, yes. Everybody enjoys watching celebrities, sometimes. 

Shiller: That’s right. 

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Smith: Now you’ve spoken about the need to take a behavioural view of finance. This of course was at the root of your much publicised disagreement, if you like, between you and Eugene Fama about the interpretation of some of the data surrounding financial markets, the rational versus the irrational analysis of what’s happening in the markets. Do you think it’s important that people have focused so heavily on that discussion between you and Fama? 

Shiller: I think the truth has some subtle dimensions which elude many people. You have to recognise that Fama has a real point. The real point is: markets are substantially efficient in some sense, in the sense that it’s not easy to make money quickly, and that the opportunities to make money that work fast and effectively will quickly be discovered and over exploited and then they’ll disappear. That’s a basic truth. I think there’s another problem, though. Once you recognise this truth, you can easily be misled into assuming that the markets are perfect as they are, when in fact they’re not. The efficient markets lesson can lead you into wrong conclusions. It can lead you into conclusions, for example, that we don’t need to regulate markets at all or very little or that we don’t need government invention intervention at all. That conclusion can have real costs. 

Smith: The focus of the attention has been on rational versus irrational. Is that what people should be thinking about? Or is that debate really not the main point? 

Shiller: The term irrational suggests things that might be… the problem is with our words, what does irrational mean? I guess, in English, that you think of a hysterical person, who’s screaming and shouting or something like that. You would say, come on, you’re acting irrational. But I think the kind of not so rational behaviour that underlies bubbles in the stock market is not quite so extreme. It is more like when you’re crossing the street and there’s a crowd of people crossing, you don’t look both ways because you just fall in step with the other people, and you don’t realise that maybe nobody is looking, and you’re all going to get run down if you don’t get out of the way. That’s a different kind of irrationality. It’s not suggested by the word irrational. The other thing is the word bubble. I got into conflicts with Eugene Fama about this during Nobel Week, and as the week progressed, I got the idea that he had a different concept about what I mean by bubble. He thought that I mean that a bubble is the time when people are acting very crazy and insane and it should be obvious to any rational person. Secondly, that it’s all going to collapse suddenly and finally, like a bubble bursts, and then it’s going to be all over. When you blow a soap bubble and it collapses, it’s catastrophic. It sounds to him like one of those religious people who say the judgment day is at hand. That’s not what I mean by bubble. 

Smith: Yes, the semantics are important, but they’re unimportant in a wider sense too, because the words that economists use when talking to each other strike the rest of us as being part of the language that we always use on a day-to-day basis. It gives the idea that we should understand what economists are talking about, and therefore there’s a sort of direct translation to the world at large, whereas actually, there’s a subtlety to the way you use words that most of us wouldn’t be able to pick up on, I assume. 

Shiller: We have different cultures. We have an academic culture, and we have a news media culture, and we have a business culture. We use similar words, but they have somewhat different meanings. Also, we use words differently because there’s different incentives. I think one problem with the word bubble is that news media, people love that word because it suggests impending catastrophe. Like this thing is going to blow any day now, you better take action. You’re going to regret it. That detracts a lot of the reader’s interest. The term is overused by news media. 

Smith: Must be hard for you because having predicted, being credited with predicting two bubbles, people must be a, constantly wanting you to predict more, and b, expecting you to predict them if they do happen. 

Shiller: That is a problem. I don’t really know how to predict these markets generally. One problem with economics is that history doesn’t repeat itself exactly. It’s constantly transforming into different kind. You see parallels between events, but they’re not the same. How do you get scientific? How can you make a scientific forecast? I think weather forecasting is so much easier, although we still have problems that things are changing, like global warming that throws them. But ideally, weather is weather and it repeats itself. We have a difference that our economic institutions are constantly changing. When in the United States, they created the Federal Reserve in 1913, they thought that would be the end of banking panics and recessions. Turned out to be wrong in 1929. But then we came up with new things like Federal Deposit Insurance Corporation that was supposed to prevent financial crises. It worked for a long time. There’s always adjustments and changes in the system that makes our previous solutions irrelevant, or at least only partly relevant. 

Smith: But it makes it very hard for somebody who gets set up a little bit like a Delphi oracle by the press who say, ‘when’s the next one going to be then?’ How much do you worry about that pressure? 

Shiller: Yes, I’m trying not to make forecasts. I get quoted by the news media, they asked me on tv ‘do you think the home price increases that we’re seeing is another bubble?’ I try to say something sufficiently cautious, but there’s a headline writer who writes a headline. It says we’re in another bubble. 

Smith: Then I suppose it could become a self-fulfilling prophecy, because I suppose if people are listening to you too closely.  

Shiller: Yes. That’s one worry. Unfortunately, I’m not fed chairman or Central bank head, so what I say isn’t taken that seriously. 

Smith: Which opens another topic for discussion. Do you ever entertain ideas of taking on that sort of role of moving into that sort of political arena? 

Shiller: I don’t think I’d be a good politician. My wife tells me that too. I have too much an impulse to speak the truth. I sympathise with these people. You can’t just speak your mind as a politician. Everything has to be calculated. I kind of like being just an outsider who says things that sometimes sound a little strange that wouldn’t get me elected. 

Smith: What would you like people to say about you when your career is sort of coming to a close? Because at the moment, people tend to say he’s the guy who predicted the two bubbles. 

Shiller: Yes, I think these two bubbles will be forgotten. They’re already fading. People don’t even remember the 2000 bubble, that’s 14 years ago. The peak in the stock markets of the world that occurred in 2000. I find my students don’t even know about 1929. Some of them, what happened in 1929? These things only persist if storytellers want to keep it going. The 1929 stock market crash has been retold so many times, and it’s kind of a legend like Mickey Mouse or Sleeping Beauty or something like that. Everything else gets completely forgotten. Of course everyone has forgotten eventually, but I guess I’d like my legacy to be some improvement in our economic system. I’ve been trying to focus on that. Now, unfortunately, academia doesn’t seem to want to reward people who think about how we could change our economic institutions. Very rarely does an economics professor ever write draft legislation and send it to a politician asking them to introduce this as a bill. We just don’t seem to be on that wavelength very much. 

Smith: Why not? Because obviously you can. 

Shiller: I think it’s law school professors may tend to do that more. It’s a division of labour and economists are kind of abstract and they see their role as explaining things the way they are. 

Smith: It’s for others to pick up that ball, and use the knowledge. 

Shiller: Yes. At Yale University until sometime in the 1930s, they had a Department of Economics, sociology, and government. It was all in one department, because all those problems are interrelated. As in other universities, they’ve split them up into separate departments, and as a political science department and a law school, and they’re all going their separate ways. If somehow we could integrate our thinking better, I think we’d be more effective. 

Smith: Last thing I wanted to ask you about was influences. You had Franco Modigliani as your PhD supervisor who also received the prize in economic sciences. Who influenced you as a thinker, would you say? 

Shiller: I’m actually struck in terms of economics. The first thing that comes to my mind is my brother, who is four years older than me, went off to college and took economics. He had Samuelson’s textbook, Paul Samuelson, he’s another Nobel Prize winner, by the way. He brought it over Christmas vacation, he brought his book home and left it out. So I read it. That’s the way I was. Anything that was left out, I would read. I was so impressed with Samuelsson. Here I was like 14 years old, and I got off onto economics from him. Later, I had the privilege of studying with him at MIT. I was impressed by the application of careful analysis to some of our societies’ deep issues of resource allocation of as I was saying, the support of organisations and institutions that achieve goals that people really want. Maybe Samuelson is my most important mentor. 

Smith: Again, despite the advice of your parents to avoid celebrities, do you have sort of heroes that you look to?  

Shiller: I don’t know where to start. One of them is John Maynard Keynes, the economist. What I particularly like about him is his first book in 1919 called Economic Consequences of the Peace. He criticised the Versailles Treaty, which would’ve imposed heavy reparations on Germany and practically predicted World War II in 1919, from the kind of rancor and anger that the reparations that were imposed by the Versailles Treaty would’ve caused. He wrote another book in 1936 about stimulus policy for depressions. I never met this person, but I thought that he had a independence of thought and a sense of importance that I found inspiring. 

Smith: Gosh, yes. The ability to see through the kind of haze, apply one’s intelligence and focus correctly amazing attributes. 

Shiller: I have many heroes, they’re never movie stars, and they’re never singers. 

Smith: Great. Okay. That’s been absolutely wonderful.   

Shiller: Great. Okay. 

Smith: Thanks very much for speaking to me. 

Shiller: Bye. 

MUSIC

This podcast was presented by Nobel Prize Conversations. If you’d like to know more about Robert Shiller, you can go to nobelprize.org. Where you’ll find a wealth of information about the prizes and the people behind the discoveries. 

Nobel Prize Conversations is a podcast series with Adam Smith, a co-production of FILT and Nobel Prize Outreach. The producer for Nobel Prize Talks was Magnus Gylje. The editorial team for this encore production includes Andrew Hart, Olivia Lundqvist and me, Clare  Brilliant. Music by Epidemic Sound. You can find previous seasons and conversations on ACAST or wherever you listen to podcasts. Thanks for listening. 

Nobel Prize Conversations is produced in cooperation with Fundación Ramón Areces.

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