Robert Shiller Talks About the Stories We Tell

The economist explains how narratives, whether true or not, can affect the economy and markets. ‘The overwhelming narrative is all about Donald Trump.’

Yale University economist Robert Shiller has produced groundbreaking research about the economy and financial markets, and in 2013 shared a Nobel Prize with Eugene Fama and Lars Peter Hansen for work on analyzing asset prices. Mr. Shiller warned of a stock-market bubble before the 2001 market slide and a housing bubble before the plunge of 2008.

Now he is focusing on narratives, specifically the idea that popular stories, whether true or false, can affect the economy and markets. An example would be the false adage that home...