Myron Scholes

A futures contract is a derivative, but the futures exchange doesn't call them 'derivatives,' they call them 'futures.'

Innovation must lead infrastructure for a simple but compelling reason: Innovation produces new types of products and markets, and it is virtually impossible to know how to run those markets efficiently before they are created.

If we internationalize everything, we end up with rules that stifle freedom and innovation.

Building a road might create temporary jobs, but does it really create wealth if it doesn't also shorten commute times or otherwise make society better off?

I was involved with Wells Fargo Bank as a consultant in the late 1960s and early 1970s, when I suggested to them that they develop a product that has become known as index funds.

Keynesian modelling relies on marginal propensity to consume and marginal propensity to invest. The idea that if we give more money to the poor, they have a propensity to consume that's much higher than the wealthy, though I wish they would talk to my wife about that; she seems to have a propensity to consume.

My first reaction on being awarded the Nobel Prize was, actually, I thought of Fischer Black, my colleague. He unfortunately had passed away. And there was no doubt in my mind that if he were still alive, he would have been a co-recipient of the Nobel Prize.

The experience of the '90s, whether it's the '94 peso crisis or the '97 crisis in Asia, the '98 crisis, even the 2001 crisis, is that we recovered pretty readily. There wasn't great consequence.

Every side of a coin has another side.

Most of the time, your risk management works. With a systemic event such as the recent shocks following the collapse of Lehman Brothers, obviously the risk-management system of any one bank appears, after the fact, to be incomplete. We ended up where banks couldn't liquidate their risk, and the system tended to freeze up.

From an early age I was very, very fascinated by uncertainty.

A bank needs models to measure risk. The problem, however, is that any one bank can measure its risk, but it also has to know what the risk taken by other banks in the system happens to be at any particular moment.