Economist Robert Shiller challenges people to rethink finance and its role in society, arguing that finance should not just be defined as the manipulation of money, or the management of risk, but as the stewardship of society’s assets.

In his latest book, “Finance and the Good Society,” Shiller discusses how society can harness the power of finance for the greater good, explaining how CEOs, investment managers, bankers, insurers, lawyers, and regulators can manage, protect, and increase assets.

He also describes how finance has historically contributed to the good of society through inventions such as insurance, mortgages, savings accounts, and pensions, and argues that new ways need to be found to rechannel financial creativity to benefit society as a whole.

Shiller will discuss his book in the community room of the Princeton Public Library on Thursday, April 26, at 7 p.m. The free event is co-sponsored by the library and Princeton University Press.

Shiller, a professor of economics at Yale University, and professor of finance and fellow at Yale School of Management, received his B.A. from the University of Michigan in 1967 and his Ph.D. in economics from the Massachusetts Institute of Technology in 1972.

He has written articles and books about financial markets, financial innovation, behavioral economics, macroeconomics, real estate, statistical methods, and on public attitudes, opinions, and moral judgments regarding markets. He writes a regular column, “Finance in the 21st Century,” for Project Syndicate, which publishes around the world, and “Economic View” for The New York Times.

His repeat-sales home price indices, developed originally with Karl E. Case, are now published as the Standard & Poor’s/Case Shiller Home Price Indices. The Chicago Mercantile Exchange maintains futures markets based on these indices.

Finance can be used for good. “Finance is widely viewed as an activity that promotes inequality. But financial institutions can be democratizing and can reduce inequality if they are set up right,” says Shiller in an interview with the Princeton University Press. “Finance is not merely about making money. It’s about achieving our deep goals and protecting the fruits of our labor. It’s about stewardship and therefore about achieving the good society.”

Learn from our mistakes. Shiller says the current financial crisis is a growing pain — the kind of accident that results from developing and moving forward. “There was too much complacency about existing institutions. Our reaction to the crisis should primarily be to develop fundamental financial innovations that better serve our real goals.”

The role of government in finance. People must be vigilant to make sure government is not captured by existing financial interests. “People have to see a sharp distinction between financial forms as they exist today, and that often serve some specific interests, and the kinds of democratized forms we might see tomorrow,” Shiller says.

“A properly functioning government and a properly functioning financial community should consider the interests of all elements of society, and will encourage innovation that will eventually make existing financial forms obsolete,” says Shiller. “Doing this well requires technical financial expertise, not political slogans, and respect for the experience of people in the financial community.”

Shiller, who was one of the few to predict the stock market bubble of 2000 and the real estate bubble that led to the subprime mortgage meltdown, says that although initial inspiration in writing “Finance and the Good of Society” was his college students, it eventually evolved.

“Doing just about anything important for our society requires some knowledge of finance and working with people in the various financial roles outlined in the book,” Shiller says. “As I worked on it more, though, I conceived a broader mission, namely rethinking how people in these financial roles actually work together to produce a good society. Thinking about this is something we should all do because it will help us do a better job of figuring out how financial innovation can improve society.”

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