STOCKHOLM — Three Americans won the Nobel Prize for economics on Monday for developing methods to study trends in stock, bond and house prices — work that has changed the way people invest.
Eugene Fama showed in the 1960s how hard it is to predict markets in the short run, while Robert Shiller two decades later showed how it can be done in the long run. Lars Peter Hansen developed a statistical method to test theories of asset pricing.
For their separate research, the three economists shared the $1.2 million prize — the last of this year's Nobel awards to be announced.
"Their methods have shaped subsequent research in the field and their findings have been highly influential both academically and practically," the Royal Swedish Academy of Sciences said.
Fama, 74, and Hansen, 60, are associated with the University of Chicago. Shiller, 67, is a professor at Yale University.
Hansen said he received the phone call from Sweden when he was on his way to the gym. He said he's not sure how he'll celebrate but he's "still working on taking a deep breath."
Shiller, an economist famous for having warned against bubbles in technology stocks and housing, said he reacted with disbelief when he got the call.
"People told me they thought I might win. I discounted it. Probably hundreds have been told that," he said to The Associated Press.
Fama helped revolutionize the practice of investing by showing it was difficult to predict individual stock prices in the short run. That led to the emergence of index funds as a common investment.
Shiller showed that there's more predictability in stock and bond markets in the long run. That encouraged the creation of institutional investors, such as hedge funds, that take bets on market trends.