Robert Shiller "Greater Psychological Impact Expected in Second Wave of COVID-19"

Professor Robert Shiller of Yale University.
Photo by Reuters Yonhap News

[Asia Economy Reporter Chunhee Lee] Robert Shiller, a Nobel laureate in economics and a professor at Yale University, said that if the COVID-19 pandemic enters a second phase, "we may have to impose lockdown measures again, and in this case, the psychological shock could be greater than during the first phase."

In a phone interview with the US CNBC on the 7th (local time), Professor Shiller diagnosed, "The big risk is that people begin to think that frustration will persist permanently," adding, "This mindset can become a self-fulfilling prophecy."

Professor Shiller predicted that the fear factor of COVID-19 will weigh heavily on the United States for years to come.

He further explained regarding the current situation, where the stock market is soaring despite expectations of the worst economic conditions since the Great Depression, that "the market does not always show a relationship consistent with economic activity." He added that investors find comfort in similar patterns, saying, "They remember recent price movements and hope they will repeat."

Professor Shiller, who received the Nobel Prize in Economics in 2013, is a scholar who has studied the impact of human emotions on financial decisions through works such as "Irrational Exuberance" and "Animal Spirits."