Summary of "1. Introduction and What this Course Will Do for You and Your Purposes"
Summary of "Introduction and What this Course Will Do for You and Your Purposes"
Speaker: Professor Robert Shiller
Main Ideas and Concepts
- Course Overview:
- The course, Economics 252: Financial Markets, is an undergraduate class taught by Professor Robert Shiller.
- It requires only introductory economics as a prerequisite.
- The focus is on real-world financial markets as a fundamental pillar of society, not just trading or making money.
- Finance is about allocating resources over time and space, incentivizing productive activity, sponsoring ventures, managing risks, and ensuring fairness.
- The course covers a broad interpretation of finance: banking, insurance, securities, derivatives, financial crises, and future trends.
- Although U.S.-centric, the course incorporates a global perspective due to its international audience (Open Yale initiative).
- Philosophical and Practical Approach:
- The course balances philosophical underpinnings with detailed, practical knowledge.
- Emphasis on understanding institutions and history rather than heavy mathematics.
- Students will learn the "language" of finance—its details and technical terms are important.
- The course is self-contained but complemented by a more mathematical course (Economics 251 by John Geanakoplos).
- Relation to Other Courses:
- Economics 251 focuses on financial theory with mathematical rigor.
- Econ 252 (this course) emphasizes real-world applications and institutions.
- Six review sessions with teaching assistants will provide additional mathematical insights.
- Purpose of the Course:
- Designed to prepare students for real-world engagement, not just finance careers.
- Finance is fundamental to many fields and life goals; everyone benefits from understanding it.
- Finance is a technology for enabling societal progress, not merely a tool for making money.
- The course encourages students to find a moral and purposeful approach to finance.
- Finance and Society:
- Finance is integral to modern capitalism and global economic growth.
- The course challenges the stereotype of finance as purely money-grubbing.
- It explores the ethical dimension of wealth and finance, including philanthropy.
- Discussion of Andrew Carnegie’s The Gospel of Wealth and the moral obligation of the wealthy to give back.
- Recognition of the concentration of wealth and the need for responsible stewardship.
- Career and Job Market Insights:
- Finance jobs are numerous and growing compared to many other fields.
- The richest people often come from finance-related sectors rather than entertainment or sports.
- Finance involves organizing large-scale enterprises, making deals, and managing capital.
- Wealth accumulation raises questions about purpose and social responsibility.
- Course Materials:
- Primary textbook: by Frank Fabozzi, Franco Modigliani, and Frank Jones.
- Professor Shiller is also authoring a book titled Finance and the Good Society (in progress), emphasizing finance’s role in building a just society.
- Guest Speakers:
- David Swensen (Yale’s Chief Investment Officer) – example of a morally driven finance professional.
- Maurice "Hank" Greenberg (Founder of AIG) – a figure with a complex but significant role in finance and philanthropy.
- Laura Cha (Hong Kong financial regulator) – representing the regulatory perspective.
- Teaching Assistants and Their Focus Areas:
- Oliver Bunn (Germany) – head TA.
- Elan Fuld (USA) – studies economics applied to pizza delivery.
- Bige Kahraman (Turkey) – specializes in Behavioral Finance, studying mutual funds and fee structures.
- Bin Li (Beijing) – focuses on Leveraged Asset Pricing and Behavioral Finance.
- Course Outline Highlights:
- Lecture 2: Risk and financial crises, including the 2008 crisis and comparisons to the Great Depression.
- Lecture 3: Finance as a technology and its future.
- Lecture 4: Portfolio diversification and the Capital Asset Pricing Model.
- Lecture 5: Insurance and its societal importance.
- Lecture 6: Efficient Markets Theory and its limitations.
- Lecture 7: Debt markets and borrowing.
- Lecture 8: Stock markets and their role in organizing enterprises.
- Lecture 9: Real estate markets and their role in financial crises.
- Lecture 10: Behavioral Finance—psychology in finance.
- Lecture 12: Banking, credit expansion, and regulation (Basel III).
- Lecture 13-14: Forward, futures, and options markets.
- Lecture 15: Monetary policy and central banks.
- Lecture 16: Investment banking and regulatory reforms (e.g., Dodd-Frank).
- Lecture 17: Professional money managers and institutional investors’ responsibilities.
- Lecture 18: Exchanges, brokers, electronic trading.
- Lecture 19: Public and nonprofit finance.
- Lecture 20: Finding your purpose in finance—
Category
Educational
