By Nikki Hager
Americans Eugene Fama, Lars Peter Hansen, both of the University of Chicago, and Robert Shiller, of Yale, shared the Nobel Prize in Economics for their work analyzing asset prices and trends in financial markets.
The award was announced last Monday, separate from other Nobel awards. The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel, more commonly referred to as just the Nobel Prize in Economics, was established in 1968 by the Swedish Central Bank, unlike the rest of the prizes that were created by the will of Alfred Nobel in 1895.
All three economists are concerned with the rationality of financial markets. However, Fama and Hansen’s work starkly counters Shiller. Most years, the committee awards the prize to economists working together, not those who contradict each other.
Fama and Shiller both try to explain and predict long-term trends in markets spanning for three years or more. Hansen developed a statistical analysis method evaluating price movements, now used in multiple fields within the social sciences.