Several years ago, Stanford University Prof. Ulrike Malmendier and Stefan Nagel, now at the University of Michigan, shed light on how extreme events, like a stock market crash, can affect the way people invest. Those who experienced low returns on their investments around a crash were less willing to take on risk in their financial decisions. It's no surprise that financial market experiences in turn could influence policy views around the world, too.
After the recent crisis, economists have been debating the appropriate role of finance in an economy. Some think finance overall serves a useful function, while others question whether finance benefits society at all, or whether the financial sector is too large.