7 Questions for Nobel Laureate Robert Shiller | Coursera Community
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7 Questions for Nobel Laureate Robert Shiller


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We're celebrating Nobel Prize Day with 7 fun questions and answers with Yale University's Nobel Laureate Robert Shiller, who also teaches the Financial Markets course on Coursera.

Did you know that during the Great Depression people were afraid of robots? People were worried about machines replacing jobs. Sound familiar? Watch the 7-minute Q&A to learn more!

https://www.youtube.com/watch?v=6VZuKeQ4VLY&feature=youtu.be

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Interesting interview, thank you for sharing!
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Great to hear Prof. Shiller again. Financial Markets of Yale University was my first online course. The course is very well structured and different from many other finance courses. Thanks to coursera for giving us a chance to learn from such a wonderful person and teacher.
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Very interesting interview with Robert Shiller. His course Financial Markets was my first here at Coursera, and i´m also a Mentor in this online course. The course is very good structured and gives a broad overview over the different areas regarding Financial Markets.
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I'd never considered taking a finance or economics course, but this interview made both seem fun. 😁 Thank you for sharing that you had such a great experience with Professor Shiller's financial markets course, @yashika_d and @Marcus!
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@Laura I will highly recommend this course to you if you are interested in this area, the best thing it is at Beginner level and deals mostly with behaviour economics and gives a great overview of financial markets. Nice to see you here @Marcus ,I also mentor this course. ☺
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Nice to see you too here @yashika.☺
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Why are the changes in beliefs about the economy for the general public, the factors most ignorant of economists, are of great importance to the economy?

The more we learn about how people really think, the more we have to rethink economic theory.

Changes in fundamental beliefs play an important role in the fluctuations of the economy. This is the result of two exciting new studies showing how people are systematically changing their beliefs about the economic future. At present, the knowledge that economists have accumulated on this subject suggests that we need to have a high degree of humility - not just in predicting where we go but in describing where we are.

In a newspaper in 2018, Julian Kozlowski from the Bank of the Federal Reserve of St. Louis, Laura Veldkamp of Columbia University and Venky Venkateswaran of the University of New York attribute part of the financial pain after the financial crisis of 2008 to change of beliefs play a role 10 years later.

Before they began to feel financial fears in 2006, almost nobody considered a Great Depression-like crisis as remote, said these writers. The financial crisis has changed this outlook and people have continued to worry about this newly discovered threat, which prevents risk-taking and government-controlled rates - the so-called threatened rates - to remain relatively low.

Scholars suggest that after an outward-looking event such as the 2008 financial crisis, standardized statistical techniques show a sudden and persistent increase in the likelihood that such an event will happen again.

Now that such a financial crisis is forever in our dataset, it is logical, they say, to continue to worry about another such crisis, even decades later. These concerns can hold back the economy.

Consider what this means for housing.

The real S & P / CoreLogic / Case-Shiller domestic domestic price index declined by 36% from 2005 to 2012. By 1890 house prices had not fallen so strongly.

Before 2008, people could logically have the possibility of such a fall being a zero probability. Now that we have experienced it, the probability will not again be zero.

These scholars are right, but the situation, in my opinion, is even worse than they imply. This is due to the fact that there is evidence from the behavioral economy that people are not entirely reasonable and do not really rely entirely on logic or standardized statistical techniques.

This behavioral economic outlook is embraced by Nicola Gennaioli of Bocconi University and Andrew Slevere of Harvard University in their remarkable new book, "A Crisis of Beliefs" (Princeton University Press, 2018).

Focusing on the stock market, Professor Gennaioli and Professor Shleifer demonstrate how changing expectations for the future are really. People tend to believe that recent trends will continue, whatever they are, and then, when things change, they are changing their expectations again.

These authors, referring to a previous study with Robin Greenwood at Harvard, have looked at six separate surveys on expected stock market returns, some looking at individuals and some focusing on professionals. Surveys were essentially correlated with each other, indicating that they really count popular beliefs about the stock market.

But Professor Gennaioli and Professor Shleifer also showed that these expectations for future returns were systematically flawed and showed no possibility of predicting what actually happened.

These mistakes tend to follow certain psychological laws. Professor Gennaioli and Professor Shleifer point out that people have what they call "diagnostic beliefs," a concept associated with the "amateur representativeness" described in 1974 by psychologists Daniel Kahneman and Amos Tversky.

Diagnostic beliefs work as follows: The doctor, trying to diagnose a patient's illness, orders a blood test that gives a credible positive effect to all patients suffering from a disease. Unfortunately, the test also gives many false positives. It is easy to assume that the patient has the disease. But the test can be simply false.

The market boom that led to the 2008 financial crisis was the result of misconceptions such as the physician's diagnostic errors, researchers say. These diagnostic beliefs were based on what seemed to be a "core of truth," said Professors Gennaioli and Shleifer: "Investors have had a high return on the market. But they exaggerate the concept of this core of truth, creating a bubble in the market.

In general, fundamental beliefs about the economy change over time. For example, the remarkable performance of the United States stock market since 2009 and the housing market since 2012 are due to a new belief system, which is reinforced not only by presidential statements, but even by tax cuts, but by a psychological dynamics operating according to well-defined psychological principles, based incorrectly, on the belief that previous growth in market prices is a strong positive asset for greater growth in the near future.

The problem of economic research today is to try to clarify these changing belief systems, their impact on the economy and their duration. Further study can show that the financial consequences of beliefs based on false premises can be deep for decades after the initial changes were made.


Robert J. Shiller is Sterling Finance Professor at Yale

The truth in a few lines from the mouth of a top economist who does not lose his words.

Article by Robert J. Shiller is Sterling Professor of Economics at Yale. in The New York Times

(Edited by @Laura to add a link to the NYT article.)
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Good Morning

ihave got courses withe Mr Robert J.Shiller ifound withe him great time to learn in financial market so much iAppreciate

Best wishes,
Lahcene

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