NEW YORK CITY: Nobel Economics laureate Robert Shiller, who yesterday shared the prize with two other economists, said he does not expect to see the US default on its debt.
The Yale University professor said he was getting out of the shower and was not properly dressed when he heard by telephone that he had won the award.
“I didn’t want to miss the phone call so I took it,” he quipped. “It was quite a surprise when it happened. I certainly didn’t expect it.”
The Royal Swedish Academy of Sciences said Shiller, Eugene Fama and Lars Peter Hansen, who are professors at the University of Chicago, had won for groundbreaking work on spotting trends in markets.
The three “have laid the foundation for the current understanding of asset prices. It relies in part on fluctuations in risk and risk attitudes, and in part on behavioural biases and market frictions,” the Royal Swedish Academy of Sciences said. Shiller, 67, is a professor at Yale University, while Fama, 74, and Hansen, 61, are both professors at the University of Chicago.
The award is for work done on the value of assets, such as stocks and bonds, and comes as the global economy is still reeling from the effects of the financial market crisis at the end of the last decade. The three were awarded for “surprising and contradictory” findings showing that the prices of stocks and bonds and other assets are easier to predict in the long term than in the short term.
Fama, Hansen and Shiller will share the prize sum of 8m Swedish kronor ($1.2m).
Shiller named 22 co-authors around the world who contributed to his work, and thanked the University in general and his department in particular.
“Well, I’m still in disbelief. I’m certainly honoured by this event. I’m starting to wonder how I can live up to the expectations that people now have of me,” he said.
In response to questions, he downplayed the prospect of an historic US debt default and any serious economic effects as a result of the partial government shutdown. “I’m thinking probably nothing big is going to happen. It should be OK,” he said.
“I’m thinking this crisis will likely be resolved. We won’t see a default. Even if we do it will be for one day or something like that and even if it’s longer its not the end of the world,” he said.
Shiller said the most important problem today was rising inequality in the United States and elsewhere in the world, which risked getting worse. “We should be thinking about this now, not wait until after it happens,” he said, calling for a contingency plan to raise taxes on the rich if it gets worse.
“I think there’s a lot more we can do and it will help make a better society,” he added. Shiller said finance is often misunderstood as about how to get rich, when it is a study of human activity at large and of making resources available.