Preface to the Paperback Edition vii
Preface xiii
Introduction: Finance, Stewardship, and Our Goals 1
Part One - Roles and Responsibilities
1. Chief Executive Offi cers 19
2. Investment Managers 27
3. Bankers 37
4. Investment Bankers 45
5. Mortgage Lenders and Securitizers 50
6. Traders and Market Makers 57
7. Insurers 64
8. Market Designers and Financial Engineers 69
9. Derivatives Providers 75
10. Lawyers and Financial Advisers 81
11. Lobbyists 87
12. Regulators 94
13. Accountants and Auditors 100
14. Educators 103
15. Public Goods Financiers 107
16. Policy Makers in Charge of Stabilizing the Economy 111
17. Trustees and Nonprofi t Managers 119
18. Philanthropists 124
Part Two- Finance and Its Discontents
19. Finance, Mathematics, and Beauty 131
20. Categorizing People: Financiers versus Artists and Other Idealists 135
21. An Impulse for Risk Taking 139
22. An Impulse for Conventionality and Familiarity 143
23. Debt and Leverage 151
24. Some Unfortunate Incentives to Sleaziness Inherent in Finance 159
25. The Signifi cance of Financial Speculation 168
26. Speculative Bubbles and Their Costs to Society 178
27. Inequality and Injustice 187
28. Problems with Philanthropy 197
29. The Dispersal of Ownership of Capital 209
30. The Great Illusion, Then and Now 219
Epilogue: Finance, Power, and Human Values 231
Notes 241
References 257
Index 273

Nobel Prize-winning economist explains why we need to reclaim finance for the common good
The reputation of the financial industry could hardly be worse than it is today in the painful aftermath of the 2008 financial crisis. New York Times best-selling economist Robert Shiller is no apologist for the sins of finance-he is probably the only person to have predicted both the stock market bubble of 2000 and the real estate bubble that led up to the subprime mortgage meltdown. But in this important and timely book, Shiller argues that, rather than condemning finance, we need to reclaim it for the common good. He makes a powerful case for recognizing that finance, far from being a parasite on society, is one of the most powerful tools we have for solving our common problems and increasing the general well-being. We need more financial innovation-not less-and finance should play a larger role in helping society achieve its goals.
Challenging the public and its leaders to rethink finance and its role in society, Shiller argues that finance should be defined not merely as the manipulation of money or the management of risk but as the stewardship of society's assets. He explains how people in financial careers-from CEO, investment manager, and banker to insurer, lawyer, and regulator-can and do manage, protect, and increase these assets. He describes how finance has historically contributed to the good of society through inventions such as insurance, mortgages, savings accounts, and pensions, and argues that we need to envision new ways to rechannel financial creativity to benefit society as a whole.
Ultimately, Shiller shows how society can once again harness the power of finance for the greater good.

Robert J. Shiller is the author of Irrational Exuberance and The Subprime Solution, and the coauthor, with George A. Akerlof, of Animal Spirits: How Human Psychology Drives the Economy, and Why It Matters for Global Capitalism (all Princeton). He is the Arthur M. Okun Professor of Economics at Yale University.