Sat, 16 Apr 2005
Robert Shiller, the author of Irrational
Exuberance, was on NPR's Talk of the
Nation last week to discuss the housing bubble and to tout the second
edition of his book. You can listen
to it online.
One caller was a real estate agent who claims there's not enough land in Las
Vegas and that it will become a land of high-rise living. Another said that
Cleveland was becoming too expensive. As an aside, I spent a couple hours in
Cleveland in 2000, and left with a favorable impression. Downtown seemed to be
undergoing a lot of development.
From the book:
Irrational exuberance is the psychological basis of a speculative bubble. I
define a speculative bubble as a situation in which news of price increases spurs
investor enthusiasm, which spreads by psychological contagion from person
to person, in the process amplifying stories that might justify the price increases
and bringing in a larger and larger class of investors, who, despite doubts about
the real value of an investment, are drawn to it partly through envy of others'
successes and partly through a gambler's excitement.
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