Diagnosing Finance's Failures: From Economic Idealism to Legal Realism

Document Type

Book Review

Publication Date



law and economics


Review of Finance and the Good Society, by Robert J. Shiller. Princeton University Press, 2012.


This book review critically examines a recent work by Robert Shiller, one of the world's leading economists. Shiller’s Finance and the Good Society reflects on contemporary financial institutions and offers principles for incrementally improving them. It fails to recognize the possibility that finance needs more than cosmetic reform.

The field of law and economics often brings the insights of behavioral economists like Shiller to current regulatory debates. This review takes the reverse approach, offering a lawyer’s perspective on Shiller’s theories. We can only hope to reform the finance sector by addressing power dynamics among boards, CEOs, traders, and investors. To the extent it fails to address how law contributes to these power dynamics, Shiller’s work slips into an unconvincing idealism.

Publication Citation

India Law Journal


Banking and Finance Law