Panelists offer perspectives on ‘The Volatility Economy’

A panel discussion held at Yale on Nov. 29 explored market volatility and how it affects middle class Americans.
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A panel discussion held at Yale on Nov. 29 explored market volatility and how it affects middle class Americans.

Jacob Hacker, director of Yale’s Institute for Social and Policy Studies, and William Casey King, director of the Yale Center for Analytical Sciences, organized the panel, titled “The Volatility Economy: Wall Street, Main Street, and the Middle Class.”

In addition to Hacker and King, the panelists included Yale economist Robert Shiller and NASDAQ chief economist Frank Hatheway. The moderator was New York Times columnist Joe Nocera.

Nocera, author of “Piece of the Action: How the Middle Class Became the Money Class” and a one-time proponent of the democratization of financial investment, kicked off the discussion. He cited the Internet crash as his epiphany that playing the market is for a very few.

“Most people are not wired to deal with the vagaries of the market. People are not good at volatility,” he said.

Each panelist offered his own view about the causes and long-term effects of a market that is often described as a roller coaster — backing up their arguments with graphs, pie charts, and copious statistics.

Shiller, whose 2000 best-selling “Irrational Exhuberance” predicted the implosion, pointed out that huge market fluctuations reflect the “animal spirits” or psychology of individual investors and do no lasting harm to the economy, which always rebounds from even the most serious downturns.

Hatheway, who as a former options-trader once profited from the ups and downs of the market, now recommends that some checks be put on the herd-mentality of panic selling.

Casey was dubious about the efficacy of circuit breakers to effect long-term changes in market behavior, and Hacker, author of “Winner Take All Politics: How Washington Made the Rich Richer—and Turned Its Back on the Middle Class,” argued that market volatility was less of a problem to the middle class than the growing disparity of wealth and income.

A video of the panel is available on the Yale LiveStream channel.

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