The Efficient Markets Hypothesis and Modern Finance with Nobel Prize Winner Eugene Fama

Jon Hartley and Eugene Fama discuss Gene’s career at the University of Chicago Booth School of Business since the 1960s and helping to start Dimensional Fund Advisers (DFA) in the 1980s, fat tails, the rise of modern portfolio theory, efficient markets versus behavioral finance, factor-based investing, the role of intermediaries, and whether asset prices are elastic versus inelastic with respect to demand.

Recorded on March 14, 2025.

ABOUT THE SPEAKERS:

Eugene F. Fama, 2013 Nobel laureate in economic sciences, is widely recognized as the "father of modern finance." His research is well-known in both the academic and investment communities. He is strongly identified with research on markets, particularly the efficient markets hypothesis. He focuses much of his research on the relation between risk and expected return and its implications for portfolio management. His work has transformed the way finance is viewed and conducted.

Fama is a prolific author, having written two books and published more than 100 articles in academic journals. He is among the most cited researchers in economics.

In addition to the Nobel Prize in Economic Sciences, Fama was the first elected fellow of the American Finance Association in 2001. He is also a fellow of the Econometric Society and the American Academy of Arts and Sciences. He was the first recipient of three major prizes in finance: the Deutsche Bank Prize in Financial Economics (2005), the Morgan Stanley American Finance Association Award for Excellence in Finance (2007), and the Onassis Prize in Finance (2009). Other awards include the 1982 Chaire Francqui (Belgian National Science Prize), the 2006 Nicholas Molodovsky Award from the CFA Institute recognizing his work in portfolio theory and asset pricing, and the 2007 Fred Arditti Innovation Award given by the Chicago Mercantile Exchange Center for Innovation. He was awarded doctor of law degrees by the University of Rochester and DePaul University, a doctor honoris causa by the Catholic University of Leuven, Belgium, and a doctor of science honoris causa by Tufts University.

Fama earned a bachelor's degree from Tufts University in 1960, followed by an MBA and PhD from the University of Chicago Graduate School of Business (now the Booth School) in 1964. He joined the GSB faculty in 1963.

Fama is a father of four and a grandfather of ten. He is an avid golfer, an opera buff, and a former windsurfer and tennis player. He is a member of Malden Catholic High School's athletic hall of fame.

Jon Hartley is currently a Policy Fellow at the Hoover Institution, an economics PhD Candidate at Stanford University, a Senior Fellow at the Foundation for Research on Equal Opportunity (FREOPP), a Senior Fellow at the Macdonald-Laurier Institute, and an Affiliated Scholar at the Mercatus Center. Jon also is the host of the Capitalism and Freedom in the 21st Century Podcast, an official podcast of the Hoover Institution, a member of the Canadian Group of Economists, and the chair of the Economic Club of Miami.

Jon has previously worked at Goldman Sachs Asset Management as a Fixed Income Portfolio Construction and Risk Management Associate and as a Quantitative Investment Strategies Client Portfolio Management Senior Analyst and in various policy/governmental roles at the World Bank, IMF, Committee on Capital Markets Regulation, U.S. Congress Joint Economic Committee, the Federal Reserve Bank of New York, the Federal Reserve Bank of Chicago, and the Bank of Canada. 

Jon has also been a regular economics contributor for National Review Online, Forbes and The Huffington Post and has contributed to The Wall Street Journal, The New York Times, USA Today, Globe and Mail, National Post, and Toronto Star among other outlets. Jon has also appeared on CNBC, Fox Business, Fox News, Bloomberg, and NBC and was named to the 2017 Forbes 30 Under 30 Law & Policy list, the 2017 Wharton 40 Under 40 list and was previously a World Economic Forum Global Shaper.

ABOUT THE SERIES:

Each episode of Capitalism and Freedom in the 21st Century, a video podcast series and the official podcast of the Hoover Economic Policy Working Group, focuses on getting into the weeds of economics, finance, and public policy on important current topics through one-on-one interviews. Host Jon Hartley asks guests about their main ideas and contributions to academic research and policy. The podcast is titled after Milton Friedman‘s famous 1962 bestselling book Capitalism and Freedom, which after 60 years, remains prescient from its focus on various topics which are now at the forefront of economic debates, such as monetary policy and inflation, fiscal policy, occupational licensing, education vouchers, income share agreements, the distribution of income, and negative income taxes, among many other topics.

For more information, visit: capitalismandfreedom.substack.com/