Nobel-prize winning economist Robert Shiller warns a pandemic of fear could tip the economy into an undeserved depression.

Shiller, an expert in how our emotions drive financial decisions, finds the sheer volume of chatter surrounding depression risks due to the coronavirus could severely hurt the economy.

"This isn't the same story as the Great Depression. The Great Depression lasted ten years. They didn't have an unemployment rate under 12% until the decade was over," the Yale University professor told CNBC's "Trading Nation" on Thursday. "It's a popular narrative. But this is a pandemic. It shouldn't last ten years. It should be over in one or two years."

Even though he suggests there are few parallels between the 1930s and now, Shiller contends there's no question the downturn will be severe.

"We may not be up to our previous peak for a long time," he added.

Shiller, who wrote the 2019 book "Narrative Economics: How Stories Go Viral and Drive Major Economic Events," warned investors on "Trading Nation" in early March that the coronavirus panic was just beginning. He also said the market meltdown was far from over.

"The shortage of supplies is generating horrible news stories that put us all on edge," said Shiller. "It may mean people won't go to restaurants or sporting events in good numbers for years. You know the disease might not well be eradicated for several years from now."