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Lecture 24: Making It Work for Real People: The Democratization of Finance

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Financial Markets (ECON 252)

Professor Shiller, in his final lecture, reviews some of the most important tools for individual risk management. Significant inequality in domestic and international communities has created a need for social insurance programs, such as those created in Germany in the late 1800s. The tax system, bankruptcy laws, and government insurance programs are used to manage risk of personal wealth. However, each of these inventions must take account of psychological factors, such as moral hazard, in order to be effective without eliminating incentives to participate in the workforce, or other negative side effects. With regard to careers, including those in finance, young people should frame decisions with morality and purpose in mind, and with a broad perspective of both.

Complete course materials are available at the Open Yale Courses website: http://open.yale.edu/courses

This course was recorded in Spring 2008.

Course Description :

Finance and Insurance, Technology and Invention, Portfolio Diversification, Efficient Markets vs. Excess Volatility, Human Foibles, Fraud, Manipulation and Regulation, Stocks, Real Estate Finance, Stock Index, Oil and Other Futures Markets.

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