In the latest “Masters in Business” podcast, I speak with Robert Shiller, Stirling Professor of Economics at Yale University and winner of the 2013 Nobel Prize in economics.
Shiller makes a key point about finance: “We really do not know the future. Since we don’t, we are talking finance and insurance. They are really about an uncertain future, sharing your risks, hedging your risks. People forget that’s a core element. It is not about beating the market necessarily; it’s about managing risks in such a way that we can be a productive society and we can achieve our goals.”
He also tells a number of fascinating anecdotes — about how he met Wharton professor Jeremy Siegel while they were both undergraduates at MIT, how the S&P/Case-Shiller Home Price indexes came about, and how the phrase “irrational exuberance” made it into a well-known 1996 speech by former Federal Reserve Chairman Alan Greenspan.
Next week, we speak with Lakshman Achuthan, co-founder and chief operations officer of the Economic Cycle Research Institute.