(CNN) -- Groundbreaking research that reshaped the way economists and investors look at how markets work has earned three American professors the Nobel Prize in economics, the Royal Swedish Academy of Sciences announced Monday.
Eugene F. Fama and Lars Peter Hansen of the University of Chicago and Robert J. Shiller of Yale University received the prize "for their empirical analysis of asset prices," the Nobel committee said.
According to the committee, the economists' research "laid the foundation for the current understanding of asset prices."
Their research showed that while it is difficult to predict asset prices in the short term, prices can be predicted in broad terms over longer terms, such as three to five years, according to the academy.
Among other implications, their work resulted in the emergence of stock index funds -- collections of assets designed to mimic the results of broader stock indexes, such as the Dow Jones Industrial. Such funds are often staples of retirement and individual investment accounts.
Reached by telephone during the news conference announcing the award, Shiller said "disbelief" was the only way to describe his reaction.
"A lot of people have told me they hoped I would win it, but I am aware that there are so many other worthy people that I had discounted it."
He said economics has broad application to improving human welfare.
"Finance drives modern civilization," Shiller said by telephone Monday. "I want to see finance developed further to benefit mankind."
The economics award was not among the original prizes created in 1895 by Swedish industrialist Alfred Nobel to honor work in physics, medicine, chemistry, literature and peace. It was added as a category in 1969 by the Swedish central bank in memory of the industrialist.
Most of the recipients of the Nobel in economics were born in the United States.
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