Irrational exuberance is the best example, in my eyes. Conventionally, economists would say that "bubbles" are just rational price fluctuations, and result fro

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.