PHOTO: AP Robert Shiller has famously predicted the past two economic crises to topple the US economy.
Economist Robert Shiller thinks his peers have missed something big. Most experts in his sphere believe the cogs of the economy are turned by policies and mathematics. But Nobel Prize-winning Shiller has always sought out the human side of the so-called dismal science.
He instead sees stories, beliefs and, most dangerously, irrational greed as key drivers of the global economy, wedding maths and psychology together. Economists, he argues, don’t “talk about things that people really care about that are driving them to behave differently. They need to listen to what these other disciplines have to say and start talking about an important driver of economic change, which is narrative”.
In 2013 he won the Nobel Prize for his work on what drives asset prices. Shiller had challenged the theory that markets are efficient and argued that they are in fact vulnerable to speculative bubbles inflated by a groundless clamour among investors.
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