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Princeton University Press
March 2005
On Sale: September 22, 2005
344 pages
ISBN: 0691123357
EAN: 9780691123356
Hardcover
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Non-Fiction
In this timely and prescient update of his celebrated 2000
bestseller Irrational Exuberance, Robert J. Shiller returns
to the topic that gained him international fame: market
volatility. Shiller breaks new ground in this second edition
by laying out in even clearer and starker terms the market
excesses that continue to destabilize the economy and
disrupt our lives. Having predicted the stock market collapse that began just
one month after the first edition was published, he now
expands the book to cover other markets that have become
volatile, particularly the recently red-hot housing market.
He includes a full chapter on domestic and international
housing prices in historical perspective. Shiller amasses impressive evidence to support his argument
that the recent housing market boom bears many similarities
to the stock market bubble of the late 1990s, and may
eventually be followed by declining home prices for years to
come. After stocks plummeted when the bubble burst in 2000,
investors moved their money into housing. This precipitated
the inflated real estate prices not only in America, but
around the world, Shiller maintains. Hence, irrational
exuberance did not disappear-it merely reappeared in other
settings. Building on the original edition, Shiller draws out the
psychological origins of volatility in financial markets,
this time folding real estate into his analysis. He broadens
the evidence that investing in capital markets of all kinds
in the modern free-market economy is inherently
unstable-subject to the profoundly human influences captured
in Alan Greenspan's now-famous phrase, "irrational exuberance." The ultimate solution to this troubling condition, he
maintains, would involve better-designed public institutions
such as a revamped social security system, new forms of
insurance to protect people's incomes and homes, and a
broader array of investment options. As was true of its
predecessor, the second edition of Irrational Exuberance is
destined to be widely read, discussed, and debated.
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