THE (Times Higher Education) - - BOOK OF THE WEEK - Matthew Reisz

Mi­hir De­sai, Mizuho Fi­nan­cial Group pro­fes­sor of fi­nance at Har­vard Busi­ness School, was born in Mum­bai, soon moved to Hong Kong but grew up, from the age of eight, in Madi­son, New Jersey. He be­lieves that he “ben­e­fited enor­mously from these moves, as they pro­vided for a great ed­u­ca­tion, a solid Amer­i­can iden­tity and a deep ap­pre­ci­a­tion for what the rest of the world of­fers”.

For his first de­gree at Brown Univer­sity, De­sai ma­jored in his­tory, “a great dis­ci­pline for learn­ing how to write and for en­gen­der­ing a more sub­tle sense of causal­ity”. He has al­ways, he says, been “a vo­ra­cious con­sumer of high and low cul­ture. I grew up feast­ing on books, tele­vi­sion and movies equally, and that pat­tern con­tin­ued un­til I be­came a pro­fes­sor…As an econ­o­mist, you are trained to dis­trust sto­ries, but writ­ing The Wis­dom of Fi­nance made me re­alise again how we cre­ate mean­ing out of nar­ra­tives.”

With a PhD in po­lit­i­cal economy, De­sai says he is “fully in­doc­tri­nated” in ab­stract math­e­mat­i­cal mod­els and pro­duces work “built on neo­clas­si­cal the­ory and var­i­ous quan­ti­ta­tive em­pir­i­cal meth­ods. The book is not a re­ac­tion against that tra­di­tion but a com­ple­ment to it. The rigour and for­malised meth­ods of eco­nom­ics and fi­nance are not op­posed to our hu­man­ity but ac­tu­ally re­lated to it.”

Yet to­day, in De­sai’s view, “much of fi­nance has be­come about value ex­trac­tion rather than value cre­ation. The book at­tempts to use the hu­man­i­ties to de­mys­tify fi­nance for out­siders and to hu­man­ise fi­nance for prac­ti­tion­ers. The dis­ci­pline is rein­vent­ing it­self, but I think in un­for­tu­nate ways. We have be­come far too en­am­oured of the lat­est be­havioural bias that psy­chol­ogy pur­ports to have found and ran­domised tri­als and all­too-sub­tle econo­met­ric meth­ods. In the process, we’re los­ing the in­tel­lec­tual co­her­ence of the dis­ci­pline and the abil­ity to ad­dress the re­ally large and press­ing prob­lems of the world.”

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