Three American economists were awarded the Nobel Prize in economics for their work on determining how asset prices change over time.
The Royal Swedish Academy of Sciences, in a statement Monday, named Eugene Fama, Lars Peter Hansen and Robert Shiller as recipients of the 2013 award for their "empirical analysis of asset prices."
The academy said that while it is hard predict the price of stocks and bonds over the next few days or weeks, the work by these economists make it possible to foresee the broad course of these prices over longer periods, such as the next three to five years.
Fama and Hansen are professors at the University of Chicago, in Illinois, while Shiller teaches at Yale University in Connecticut.
2013 Nobel Prize for Economics
Eugene Fama of the University of Chicago
Lars Hansen of the University of Chicago
Robert Shiller of Yale University
Awarded for their empirical analysis of asset prices
They found it is possible to foresee the broad course of stock and bond prices over long periods of time
Shiller said finance is often misunderstood as being about making money rather than a way of allocating resources, giving people incentives and spreading risks. He said "rising inequality" is the most important problem facing the United States and other parts of the world today.
"This is a problem that has solutions," said Shiller. "Many of them are financial solutions. Finance is substantially about risk management, and if it's supplied right, if it's democratized, the real tools are made useful to real people, and not to just the minority of people, it can help solve these problems."
The economics prize, officially called the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel, was established in 1968. It is not one of the original awards created by Swedish industrialist Alfred Nobel, the inventor of dynamite, in 1895.