Jump to content
House Price Crash Forum
Sign in to follow this  

Shiller And Fama Share Nobel, Disagree About Everything

Recommended Posts

I like and respect Bob Shiller's work. One of the few who saw the crash coming.

Fama, like rest of the Chicago school, is a charlatan. He not only didn't expect a crash, he espouses an economic philosophy which asserts that crashes are impossible.

It is no secret that two of the three winners of this year's Nobel economics prize disagree – after all, they are economists. But Robert Shiller has taken the tiff with Eugene Fama over the efficiency of markets to a new level.

Highlighting what he sees as a mismatch between Fama's findings and his theories, he suggested his fellow laureate must feel like a Catholic priest who has discovered God does not exist.

While Shiller holds that investors, being human, can be swayed by psychology, Fama contends markets are always efficient, with people incorporating all available information into prices.

To mark their acceptance of the prize last night, the two economists and fellow prizewinner Lars Peter Hansen spoke to Swedish public service television SVT about sharing the Nobel prize for their seemingly opposing theories.

While Fama said it was "great" to share the prize, Shiller was less enthusiastic. "[Fama] is a careful researcher, an inspired researcher," he said, adding: "I don't know if Fama ever states his theory really clearly, if he did it might sound a little odd."

The author of Irrational Exuberance mused that Fama may suffer from "a cognitive dissonance" given, he argued, that his own findings contrast with orthodoxy at his University of Chicago home.

Meanwhile, Fama said there was no way to settle their 21-year debate.

Shiller, whose wife is a psychologist, told SVT (just before 28 minutes into the interview): "I shouldn't try to psychoanalyse Eugene Fama but I know that he is committed … to a libertarian philosophy, teaching at the University of Chicago where Milton Friedman once lived.

"It must affect your thinking somehow that they really believe in markets. I think that maybe he has a cognitive dissonance. His research shows that markets are not efficient. So what do you do if you are living in the University of Chicago? It's like being a Catholic priest and then discovering that God doesn't exist or something, you can't deal with that, you've got to somehow rationalise it."


Share this post

Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
Sign in to follow this  

  • Recently Browsing   0 members

    No registered users viewing this page.

  • The Prime Minister stated that there were three Brexit options available to the UK:   289 members have voted

    1. 1. Which of the Prime Minister's options would you choose?

      • Leave with the negotiated deal
      • Remain
      • Leave with no deal

    Please sign in or register to vote in this poll. View topic


Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.