Wealth

Americans want to 'live big' in the Trump era, Nobel Prize winner says

Shiller on Trump and market psychology
VIDEO4:3504:35
Shiller on Trump and market psychology

In the Trump era, excess is in and modesty is out.

After years of stealth wealth, humility and downsizing, the president-elect is ushering in a new era of living large, Nobel Prize-winning economist Robert Shiller said Wednesday.

"We used to be more into modest living," the Yale professor told CNBC, speaking about the years after the financial crisis. "Now people are thinking, '[that] doesn't work.' You know? You have to live big-league and you're on your way."

While there's no empirical evidence pointing to this shift, Shiller said the excitement is visible at Trump rallies and in the stock market. Despite a slight dip on Wednesday, the Dow Jones industrial average remained near 20,000.

Donald Trump visits Turnberry Golf Club in Turnberry, Scotland.
Ian MacNicol | Getty Images

Shiller's comments add to budding sentiment that America's new billionaire-in-chief — with his gold-plated penthouse, private jumbo jet and multiple mansions — could shift American attitudes away from inequality and toward the 1980s-style aspiration and worship of wealth.

That quest for the good life could also stimulate spending — particularly in housing, Shiller said.

"Trump is a real estate man, right? He talks about living big, living large. I can imagine that this will boost housing demand as well, among at least those who are excited by Trump," he said.

Still, Shiller cautioned that investors shouldn't get too comfortable, as the Trump rally could end up like Calvin Coolidge's run nearly a century ago. Coolidge was president during the Roaring '20s, before the decade-long Great Depression started in 1929.

"It could be like ... Coolidge prosperity. It went for a while and it ended badly," he said.

—CNBC's Matt Belvedere contributed to this report