Interview with Robert J. Shiller

“There’s a basic human element in it that’s irreducible”

Transcript of the telephone interview with Robert J. Shiller recorded immediately following the announcement of the 2013 Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel, 14 October 2013. The interviewer is’s Adam Smith.

[RS] Hello?

[AS] Hello, may I speak to Robert Shiller please?

[RS] Speaking.

[AS] Hello, my name’s Adam Smith. I’m calling from, the official website of the Nobel Prize in Stockholm.

[RS] Oh okay.

[AS] We have a tradition of recording very short interviews with new Laureates – could we just speak for a few minutes?

[RS] Yeah.

[AS] Thank you very much indeed. Well first of all, many congratulations on the Prize.

[RS] Thank you.

[AS] How did you hear the news?

[RS] I was getting ready to leave on a trip to Phoenix, Arizona, getting dressed, and I got called.

[AS] (laughs) And, what was your first reaction?

[RS] Disbelief.

[AS] Do you think the trip to Phoenix is going to go ahead?

[RS] Well, it’s at least postponed and it may be cancelled.

[AS] How do you think the day is going to pan out? (laughs)

[RS] (laughs) I don’t know, the phone is ringing an awful lot.

[AS] (laughs) Have you imagined yourself in this position before? Have you imagined how you might react to it if the news came?

[RS] Well, I certainly imagined, because friends of mine repeatedly tell me they think that … they expect me to win it. But I’ve always reflected that there are so many worthy people, that it’s difficult to … I thought it was a very low probability.

[AS] Who was the first person you told, after the household?

[RS] I woke my wife up and told her. Then I told the limo driver to cancel my limo.

[AS] Very practical. (laughs)

[RS] Well, I had to do it!

[AS] But, I just wanted to ask you how, just one question, because this is going to expose your field of research to a very wide audience, who won’t previously have been aware of it. It’s all to do with the predictability of asset pricing. How good a handle do you think we have on that? Do you think it’s very much a work-in-progress or have we got things pretty well worked out?

[RS] It’s very much a work-in-progress, yeah. Well I could briefly say that it’s … we’ve learned a lot about asset pricing, but there’s a basic human element in it that is irreducible. So, predicting what asset prices will do is partly similar to trying to predict what one person will do, and so could there ever be a science in predicting what you, Adam, will be doing? No, because there’s an irreducible human element. And that’s part of the reason why the field of finance will never completely understand asset pricing movements.

[AS] That was a lovely, very understandable comment. Thank you very much indeed.

[RS] Alright. (laughs)

[AS] Okay, so I look forward to talking again, at length, later in the autumn ([RS] Good). But for now, let me wish you a wonderful day, and congratulations.

[RS] Alright.

[AS] Thank you.

[RS] Bye.

[AS] Bye.

Listen to the Interview

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