Yale economist Robert Shiller — best known for his housing market acumen — now says that stocks have dropped below fair value for the first time in 17 years.

Shiller bases his view on a recent update of his 140-year data series for the S&P 500.

His updated data show the rolling 10-year earnings for the S&P 500 have dropped to about 15, slightly below the long-term average, suggesting that over the next couple of decades the S&P could deliver a 6 percent to 7 percent average long term return.

Shiller isn’t alone in believing shares are going for less than they’re worth. Seventy-eight percent of institutional money managers recently surveyed by Northern Trust Global Advisors think so, too.

Shiller is a bit more isolated in his view that derivatives, rather than being a big problem for markets, should instead be as common as cash.

Derivatives "are a risk management tool much the same way insurance is,” Shiller told Newsweek.

“You pay a premium and if an event happens, you get a payment."

Economist Robert Kuttner sharply disagrees.

In a recent report, Kuttner says some types of securities ought to be prohibited because they allow product innovators to play “an endless cat-and-mouse game with regulators.”

“How is the world worse off and the economy less efficient if entire categories of derivatives simply do not exist?” Kuttner asks.