University of Chicago professor Richard Thaler may have won the Nobel Economics Prize on Monday for his work on behavioural economics, but the behaviour of investors has him stumped.
Thaler said on Tuesday he is puzzled by the steady rise of global stock markets in recent years, even as many countries are gripped by political and social drama.
“It’s a mystery to me. That, and the unbelievably low volatility in a time of massive global uncertainty seems mysterious to me,” Thaler said in a phone interview from his Chicago apartment.
Thaler also said his field could do more to research how human psychology affects things like inflation or interest rates.
“Behavioural economists have not invested as much in macro as I would like,” he said.
The S&P 500 index has been reaching repeated records since President Donald Trump’s election last November amid steady growth in the U.S. economy and labor market, as well as expectations for lower taxes, though policy action in Washington has been limited. Thaler, who has made a career of studying irrational and temptation-driven actions among economic actors and won the Nobel for such contributions to behavioral economics, expressed misgivings about the low volatility and continued optimism among investors.
Thaler also took a swipe at Brexit, saying that Britain’s vote last year to leave the European Union was based on disenchantment.
“I don’t think that the leave votes were based on any implicit spreadsheet running in people’s heads -- it was just like, ‘I’m angry, and I’m voting no,’” he told Bloomberg TV’s Vonnie Quinn and Mark Barton. Of the Brexit process, he said: “It doesn’t seem to be headed in any productive direction.”
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