Robert J. Shiller
Economist who co-developed the Case–Shiller index and won the 2013 Nobel.
Robert James Shiller (born March 29, 1946) is an American economist, academic, and author. As of 2022, he served as a Sterling Professor of Economics at Yale University and is a fellow at the Yale School of Management's International Center for Finance. He is known for co-developing the Case–Shiller housing price index and the cyclically adjusted price-to-earnings ratio, challenging the Efficient Market Hypothesis, and warning years in advance of the stock market and housing bubble that led to the subprime mortgage crisis. Shiller jointly received the 2013 Nobel Memorial Prize in Economic Sciences with Eugene Fama and Lars Peter Hansen for their empirical analysis of asset prices.
- born
- March 29, 1946
- field
- Economics
- nationality
- American
- known_for
- Case–Shiller housing price index, cyclically adjusted price-to-earnings ratio, c
Verified Timeline
Lore & Background
Shiller was born in Detroit, Michigan, to Ruth R. and Benjamin Peter Shiller, of Lithuanian descent. He was raised as a Methodist. He attended Kalamazoo College for two years before transferring to the University of Michigan, graduating Phi Beta Kappa with a B.A. in 1967. He received an S.M. from MIT in 1968 and a Ph.D. from MIT in 1972, with a thesis titled 'Rational expectations and the structure of interest rates' under Franco Modigliani. He has taught at Yale since 1982, previously holding faculty positions at the Wharton School and the University of Minnesota, and has given frequent lectures at the London School of Economics. In 1981 Shiller published an article challenging the efficient-market hypothesis, arguing that stock market volatility was greater than could be explained by rational views of future dividends. His survey research since 1989 bolstered the hypothesis that investor decisions are often driven by emotion. In 1991 he co-founded Case Shiller Weiss with Karl Case and Allan Weiss, developing a repeat-sales index later acquired by Fiserv and Standard & Poor, creating the Case–Shiller index. His book 'Irrational Exuberance' (2000) warned of a stock market bubble at its peak. In 2005 he noted that housing price rises could not outstrip inflation long-term, and in 2006 and 2007 he warned of a housing market collapse and financial panic.
Reader's Guide
Robert J. Shiller's significance lies in his empirical challenges to the Efficient Market Hypothesis and his development of key financial metrics. His co-creation of the Case–Shiller housing price index provided a standard for tracking U.S. home prices, while the cyclically adjusted price-to-earnings ratio offered a tool for assessing stock market valuation. His warnings about the stock market bubble in 2000 and the housing bubble in the mid-2000s, culminating in the subprime mortgage crisis, demonstrated the practical value of his behavioral finance approach. Shiller's work, recognized with the 2013 Nobel Prize, shifted economic discourse toward understanding market volatility and the role of psychology in asset pricing. His research on risk sharing, bubbles, and crises has influenced both academic theory and policy making, and his continued presence among the world's most influential economists underscores his lasting impact on the field.
Did You Know?
- Shiller was raised as a Methodist and is of Lithuanian descent.
- He earned his Ph.D. from MIT in 1972 under the supervision of Franco Modigliani.
- His 1981 article challenging the efficient-market hypothesis was later named one of the 'top 20' articles in the 100-year history of the American Economic Association.
- Shiller co-founded the investment management firm MacroMarkets LLC and serves as its chief economist.
- He has been a regular contributor to Project Syndicate since 2003.
Frequently Asked Questions
Who is Robert J. Shiller?
Robert James Shiller (born March 29, 1946) is an American economist and Sterling Professor at Yale University, best known for creating widely used tools to measure housing and stock-market valuations. He shared the 2013 Nobel Memorial Prize in Economic Sciences for his analysis of asset prices.
What is the Case–Shiller housing price index?
It is a benchmark for tracking U.S. residential home prices over time, co-developed by Shiller and Karl Case. Unlike simple spot-price quotes, it follows the same group of homes across sales to capture genuine price movement rather than shifts in what kind of house is being traded.
What is the CAPE ratio and why does it matter?
The cyclically adjusted price-to-earnings ratio, often called the Shiller P/E, smooths ten years of earnings to remove short-term boom-and-bust noise. Fans of his work point to it as a long-run gauge of whether the stock market is over- or undervalued relative to history.
Why did Shiller win the 2013 Nobel Prize?
The Nobel committee recognized his empirical work showing that asset prices do not always reflect all available information, directly challenging the Efficient Market Hypothesis. His research gave a formal, data-driven foundation to the idea that investor psychology and narrative drive markets.
Did Robert Shiller actually warn about the 2008 financial crisis?
Yes. In the mid-2000s he publicly argued that both the U.S. housing market and the equity market had stretched into bubble territory, well before the subprime mortgage collapse. His early warnings are frequently cited by fans as a real-world vindication of his market-irrationality research.
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