Economists who adhere to rational-expectations models of the world will never admit it, but a lot of what happens in markets is driven by pure stupidity - or, rather, inattention, misinformation about fundamentals, and an exaggerated focus on currently circulating stories.— Robert J. Shiller
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In the longer run and for wide-reaching issues, more creative solutions tend to come from imaginative interdisciplinary collaboration.
The ability to focus attention on important things is a defining characteristic of intelligence.
Money management has been a profession involving a lot of fakery - people saying they can beat the market, and they really can't.
Stock prices are likely to be among the prices that are relatively vulnerable to purely social movements because there is no accepted theory by which to understand the worth of stocks....investors have no model or at best a very incomplete model of behavior of prices, dividend, or earnings, of speculative assets.
I am worried that the collapse of home prices might turn out to be the most severe since the Great Depression.
Consider our difficulties avoiding junk food and overspending.
Such addictions were carefully planned-for by professional marketing teams.
Somehow, talking to young students brings you back to reality - it should, anyway.
The good news is that, at least in economics, I've seen movement away from its overemphasis on mathematical models of purely rational behavior to a more eclectic and commonsense approach: research that is, among other things, more respectful of insights from psychology.
As I write in 2012 we certainly do not believe that it is over yet, and the worst may be yet to come. Efforts by governments to solve the underlying problems responsible for the crisis have still not gotten very far, and the 'stress tests' that governments have used to encourage optimism about our financial institutions were of questionable thoroughness.
It amazes me how people are often more willing to act based on little or no data than to use data that is a challenge to assemble.
Each profession has its own toolkit.
I have argued that we need livelihood insurance, which would protect people against the risk of seeing their skills and expertise no longer needed. Such insurance could be offered by the private sector.
Marketers know that if people you respect - perhaps laughably including entertainers and athletes - say they like a product, you're more likely to buy.
My clinical psychologist wife of 40 years has always had a close intellectual influence on me. When I was beginning to talk openly in the economics profession about irrationality in decision-making, I received a lot of criticism. Ginny would support my views and remind me that a whole other profession - psychology - studies people's irrational sides.
Life's meaning heavily benefits from lifelong bonds.
Can a controlled experiment explain why people like Kewpie dolls in one year, Beanie Babies in another, and American Girl dolls this year? Yet social scientists are asked to answer analogous questions. We economists and perhaps psychologists shouldn't overreact to the derision. That is, we shouldn't try to overlay a false sense of precision on our admittedly squooshy work.
A major boom in real stock prices in the US after Black Tuesday brought them halfway back to 1929 levels by 1930. This was followed by a second crash, another boom from 1932 to 1937, and a third crash. Speculative bubbles do not end like a short story, novel, or play. There is no final denouement that brings all the strands of a narrative into an impressive final conclusion. In the real world, we never know when the story is over.
Liberalism downplays certain of our moral senses: loyalty, authority, and sanctity.
Economics is (now) about emotion and psychology.
In the short run and for decisions unlikely to have broad impact, it may be more cost effective to use just one expert.
Physicists have a bias to aspire to be "seers" like Einstein rather than "craftspeople" who do simple and practical research. I have seen that in economics departments. The same must be true to some extent in other departments.
Some of the best theorizing comes after collecting data because then you become aware of another reality.
There is more uncertainty than usual about job futures because computers are replacing more and more human intelligence, and globalization is proceeding at an accelerating pace.
News media stimulate bubbles, since stories about them boost their audience.