The Campbell-Shiller identity used by thousands of economists fails to account for common corporate actions like stock buybacks.

Asset pricing models often rely on this specific mathematical approximation as if it were a universal law of physics. Research shows the formula breaks down under subjective beliefs and modern financial maneuvers. This error means many fundamental calculations about market value are based on a flawed assumption. Economists have treated this accounting tool as an absolute truth for decades without checking its limits. Investors and academics might be misinterpreting market signals because their primary measuring stick is broken.