Screens display a tribute to Jack Bogle, founder and retired CEO of the Vanguard Group, on the floor of the New York Stock Exchange. (Brendan McDermid/Reuters))
Harold Pollack is a professor at the University of Chicago.H e is the co-author, with Helaine Olen, of "The Index Card: Why Personal Finance Doesn't Have to be Complicated."

When historians chronicle the new American economy, they will note Silicon Valley giants such as Steve Jobs and Bill Gates, who created new products that revolutionized whole markets, and who, overall, improved millions of people’s lives. This week brought the death of another American entrepreneur who deserves consideration for that same list: Vanguard founder John C. “Jack” Bogle. More than any other single person, Bogle pioneered and popularized the low-fee index funds that now dominate the mutual fund industry, and which fuel millions of people’s retirement.

Bogle was not the only person to notice the value of a low-fee well-diversified portfolio. Various institutional investors and such prescient academics as Paul Samuelson also recognized that it's a fool's errand for ordinary investors to time the market or to bet their savings on picking individual stocks. But Bogle took these ideas to fruition and to scale. In opposition to the prevailing assumptions, self-interest and self-conception of his own industry, he made index investing a reality for millions of people.

Briefly put, an index fund is a type of mutual fund whose investments are chosen to track a broad market index, such as the companies represented in the Standard & Poor’s 500-stock index. As a result, they do not require huge staffs to chase fleeting opportunities or to identify specific winning investments. They do not pursue heavy trading. So index funds have far lower operating expenses than more “actively managed” funds. Not coincidentally, they avoid key “management risks” arising from speculation and heavy trading.

In 1978, elite institutions could follow this simple model, but index funds were essentially nonexistent within the broad consumer market. Most financial professionals remained convinced that actively managed funds — particularly the ones they themselves were highly paid to operate — were better. Forty years later, low-fee index funds dominate the market. Most financial professionals now presume these are the best value for ordinary investors. And no wonder: Traditional actively managed mutual funds typically underperform low-fee index funds. Over the past 15 years, more than 90 percent of such actively managed funds trailed their corresponding market average.

Many actively managed funds charge annual fees of 1 percent or more — five times what is charged by the sort of funds Bogle founded, with little evidence of corresponding benefit. That 1 percent may not seem like much. It is — because this 1 percent is charged and compounded year after year, for the rest of your life. Straightforward calculation suggests that high-fee investment products deprive workers of 20 percent or more of their retirement nest eggs. The large academic literature documenting these findings played a major role in the Obama administration’s 2015 decision to impose new regulations designed to reduce conflicts of interest and excessive fees within employer retirement plans.

Competition from index funds has reduced the price of other investment products and forced providers of more speculative investments to rigorously justify what exactly they offer. All told, the index fund revolution transferred billions of dollars out of the bank accounts of investment managers, and into the retirement accounts of ordinary American investors.

And that's only part of it.

Imagine how terrible retirement planning would be if it depended on your ability to outguess everyone else and you actually had to pick winning stocks — actually had to understand whether Amazon’s price-to-earnings ratio is dangerously high, or whether the Dodge Caravan rivals the next generation of minivans. If we were faced with the need to become financial professionals on top of our day jobs, most of us would flail randomly at shiny stocks we heard mentioned on the essentially harmful genre of financial media, ranging from Louis Rukeyser’s high-toned “Wall Street Week” to Jim Cramer on CNBC. Or we would overpay investment professionals to do this (probably badly) on our behalf.

Many of us would do nothing at all. We would put off or shy away from saving. We would thus miss out on the long-term stock market returns most of us desperately need to finance our retirements.

The genius of Bogle's contribution was to move retirement savings from the realm of a forbidding and arcane casino game to a routine and manageable aspect of everyday life. There's no reason to follow the stock market's latest gyrations. Ninety-nine percent of investors have no reason to read the business page of the paper.

I only wish more Americans would get the memo. Bogle’s philosophy runs against the grain of a hugely profitable industry — an industry that still spends a fortune in marketing trying to convince ordinary investors that the managers of a particular fund understand how changing patterns among Indonesian sea life will move the German stock market. That’s a bad bet. No less of a stock market champion than Warren Buffett advised his own heirs to choose index funds.

As with any upheaval, the index fund revolution brings some problems. Retirement savings programs are way too complicated, and many still overcharge workers and consumers. (The Trump administration shamefully backtracked on Labor Department measures to address this problem.)

Vanguard itself manages the unimaginable sum of $5 trillion and has come to dominate its market. This raises obvious antitrust concerns, and accompanying challenges to corporate governance. As index funds own a larger and larger share of America’s stocks, their role as corporate citizens deserves greater scrutiny. If index funds own huge stakes in every airline, how will they operate when questions arise over industry collusion and consolidation?

What’s more, because they track whole markets and emphasize shareholders’ long-term financial interests, index funds also tend to sidestep sensitive political questions that are often critical for public policy, on matters as varied as climate change and public disclosure of firms' political contributions and lobbying. As more Americans load up on stocks, we may accommodate ourselves to corporate misbehavior that fattens our own bottom lines.

And unfortunately, index investing has had an uneven impact. It has most dramatically changed the lives of relatively prosperous people like myself, people who are best-equipped to avail ourselves of tax-subsidized and regressive savings vehicles such as corporate 401(k)s. The index fund revolution’s very success has aggravated wealth inequality. It subtly weakens our sense of common fate with tens of millions of fellow citizens who rely on Social Security for the bulk of their retirements.

Index funds shouldn’t obviate the need for social insurance and humane policy. Still, Bogle's legacy provides many reasons to be grateful. Many years ago, a colleague entered my office and confessed she was doing little for retirement. Her options were too confusing and complicated. She just didn't know where to start. We walked through the simple logic of a target date fund, and what she needed to sensibly contribute.

She recently cornered me in the hallway with the happy news that she’s now ready to comfortably retire. This reflects her efforts over many years as a frugal, effective saver, blessed with a steady job. Jack Bogle deserves real credit, too, for helping millions of people live better lives.