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Indeed, he is well qualified, and I find that he is an original thinker, able to go against the grain of mainstream economics and find valuable insights. Howev

Indeed, he is well qualified, and I find that he is an original thinker, able to go against the grain of mainstream economics and find valuable insights. However, in this case, I find the narrative to be simplistic. It is almost shockingly narrow to pin it specifically on tales of house flipping. Yes, lots of people thought buying a house was a good investment, but the attribution to an enthusiasm about house flipping doesn't hold water for me.

ci5er 9y ago
> able to go against the grain of mainstream economics and find valuable insights. Like what?
- jtraffic 9y ago
  Irrational exuberance is the best example, in my eyes. Conventionally, economists would say that "bubbles" are just rational price fluctuations, and result from new information. Shiller's explanation was much more about contagion, psychology, excitement. This may not seem to have implications, but the fact that momentum trading has been shown over and over to work (if done in a very specific way), suggests that Shiller is correct. That is just my perspective on it. I'm a bit apprehensive about characterizing the entire field of conventional economics as I've done. There is a large amount of variation in opinion among economists. But my feeling is that the prevailing consensus before Shiller was about rationality. Some will say that Shiller didn't come up with the idea, that it's just a packaging of what Keynes said about Animal Spirits. Consider this quote from Keynes, for example: "Even apart from the instability due to speculation, there is the instability due to the characteristic of human nature that a large proportion of our positive activities depend on spontaneous optimism rather than mathematical expectations, whether moral or hedonistic or economic" In any case, Shiller has received a large degree of credit for consistently pressing the issue, and he was lucky enough to be pushing it forward right before 2008, which many saw as a validation of his theory.

ci5er 9y ago

> able to go against the grain of mainstream economics and find valuable insights. Like what?

jtraffic 9y ago
Irrational exuberance is the best example, in my eyes. Conventionally, economists would say that "bubbles" are just rational price fluctuations, and result from new information. Shiller's explanation was much more about contagion, psychology, excitement. This may not seem to have implications, but the fact that momentum trading has been shown over and over to work (if done in a very specific way), suggests that Shiller is correct. That is just my perspective on it. I'm a bit apprehensive about characterizing the entire field of conventional economics as I've done. There is a large amount of variation in opinion among economists. But my feeling is that the prevailing consensus before Shiller was about rationality. Some will say that Shiller didn't come up with the idea, that it's just a packaging of what Keynes said about Animal Spirits. Consider this quote from Keynes, for example: "Even apart from the instability due to speculation, there is the instability due to the characteristic of human nature that a large proportion of our positive activities depend on spontaneous optimism rather than mathematical expectations, whether moral or hedonistic or economic" In any case, Shiller has received a large degree of credit for consistently pressing the issue, and he was lucky enough to be pushing it forward right before 2008, which many saw as a validation of his theory.