Fama’s right. Shiller is right. They Can’t BOTH be right? You’re right too!

Fama’s right. Shiller is right.  They Can’t BOTH be right?  You’re right too!

By Shlomo Maital      

Eugene Fama & Robert Shiller

 Univ. of Chicago Economics Professor Eugene Fama has won the Nobel Prize for Economics this year, for his research proving that capital markets are fully efficient and rational.

  Yale Univ. Professor Robert Shiller has also won the Nobel Prize in Economics this year, for his research proving that capital markets are irrational and inefficient.

   Wait.  Yet again?  Two economists win the Nobel Prize for proving the diametric opposite?  You say, they can’t BOTH be right?

   Well – you’re right, too.  Everybody is right.  And that’s what’s wrong with economics. 

   Sure, you can finesse this mess. You can say, well, capital markets are usually rational, but sometimes they’re not. 

   Not helpful.  When are they NOT?  When are there bubbles?  How do you know? 

   These diametrically opposite Nobel Prizes for Economics would be impossible in Chemistry or Physics.  There, you have to show clear results.  Higgs won it, for Physics, because at CERN they found strong proof that the particle Higgs theorized actually existed.  They didn’t give the prize simultaneously to someone who proved it did NOT exist.

   Economics is in a sorry state.  The Nobel awards simply reveal that.