In 2003, Yale University professor Dr. Robert Shiller ("Irrational Exuberance") published his widely heralded tome, "The New Financial Order: Risk in the 21st Century."  In it Shiller lays out his ideas for "radical financial innovation," and, specifically, the development of financial products and services which provide for the management of personal financial risk: retirement, home equity, job security.  He also outlines his ideas for the development of "macro markets" wherein investors buy claims to economic aggregates such as national income and real estate.

Clearly there is merit to Shiller's ideas.  Recent events in the housing marketplace suggest that there would be a large market for some form of product to hedge against adverse movements in home prices and interest rates.  The market for a retail energy hedging product is enormous.  Perhaps it is the complexity of financial risk management which makes such products unworkable in the personal finance marketplace, but surely the finest minds in marketing could devise a method for communicating such complexity to the masses.

The beginnings of such a project can be found in HedgeStreet, a trading venue which enables investors to take positions in foreign currency, Fed funds rate, precious metals, and energy markets.  The system is based on binaries.  At inception the underlying value of the binaries was only $10 but was raised to $100 about a year later.  This platform is ideal for trading and speculating, but as for providing insurance or a true hedge against gas prices or home values, not so much.  (The site currently only offers its "Mock Trader" platform for trading virtual cash.  It appears to be undergoing some restructuring.)

It would seem that while there is a critical need for research and development in areas such as alternative energy to protect us from environmental ruin, there is also a need for research and development in alternative finance to protect us from personal economic ruin.