COMPLEXITY
Katherine Collins on Better Investing Through Biomimicry
Podcast summary created with Snipd AI
Quick takeaways
- The same headline number in the economy does not imply the same implications, and it is important to question and explore what changes might be necessary.
- Many metrics used in finance and economics serve as proxies for deeper qualities, and it is crucial to recognize the inherent limitations of metrics and consider broader conversations.
- The pandemic has highlighted the importance of resilience, adaptation, and reimagining economic systems, as well as the potential benefits of economic collapse as opportunities for renewal and more resilient practices.
Deep dives
The Economy and Growth
The economy can grow in a way that improves overall health and well-being, or in a way that is extractive and divisive. The key is understanding that the same headline number does not imply the same implications. This past year has provided an opportunity for reflection on the path we have been on and whether it is enough on all dimensions. It is important to question and explore what changes might be necessary.
Metrics and the Limitations of Quantification
Many metrics used in finance and economics serve as proxies for deeper and more nuanced qualities. The gender composition of boards is an example of a measurable metric, but it is far from capturing the multi-dimensional nature of diversity and inclusion. The challenge lies in the tension between efficiency and quantifiability, and the desire to control and measure everything. It is crucial to recognize the inherent limitations of metrics and to consider broader conversations and alternative questions.
Reflection and Reimagining Post-Pandemic
The pandemic has forced individuals and societies to reflect on the path they were on and whether it is enough. It has highlighted the importance of resilience, adaptation, and reimagining economic systems. Questions of enoughness and adaptability arise, as well as the balance between top-down design and emergent behaviors. The exodus to alternative platforms and the growing focus on local investment options demonstrate a relocalization of economic behaviors and a desire for human-scale interactions and communities.
Transforming Financial Metrics and Asking Bigger Questions
The episode explores the need to move beyond traditional financial metrics and ask more essential and open-ended questions in the world of finance. It highlights the importance of not solely relying on numbers but also considering deeper, more interesting issues. The conversation touches on the dangers of relying too heavily on efficiency and mechanization in finance and the need for creative thinking and adaptation. It emphasizes the potential of using high-frequency tools to assess factors beyond just prices, such as employee performance. The episode encourages reevaluating metrics and approaches in finance to bring about more adaptive and beneficial insights.
Resilience, Form vs Function, and Embracing Uncertainty
This part of the episode delves into the concepts of resilience and form versus function in various contexts, including finance and natural systems. It highlights the importance of understanding that resilience involves maintaining function in the face of disruption rather than rigidly adhering to a specific form. The discussion explores the need for a paradigm shift towards dynamic and adaptable approaches, moving away from static and standardized metrics. It brings up questions related to economic growth, distribution, and the potential benefits of economic collapse as opportunities for renewal and more resilient practices. The conversation underscores the significance of agency, creativity, and the pursuit of unique contributions to navigate the complexities of an uncertain world.
We are all investors: we all make choices, all the time, about our allocation of time, calories, attention… Even our bodies, our behavior and anatomy, represent investment in specific strategies for navigating an evolving world. And yet most people treat the world of finance as if it is somehow separate from the rest of life — including people who design the tools of finance, or who come up with economic theories. Many of the human world’s problems can be traced back to this fundamental error, and, by extension, many of the problems we create for other life-forms on this planet. What changes when we take the time to pause, and listen, and reflect on how the biosphere already works? How do we balance innovation with sustainability, or growth with resource distribution? Could a careful study of nature not only lead to better business outcomes but also help us heal the living world?
Welcome to COMPLEXITY, the official podcast of the Santa Fe Institute. I’m your host, Michael Garfield, and every other week we’ll bring you with us for far-ranging conversations with our worldwide network of rigorous researchers developing new frameworks to explain the deepest mysteries of the universe.
This week we talk to SFI’s new Board Chair Katherine Collins, Head of Sustainable Investing at Putnam, about insights encoded in her book, The Nature of Investing. We discuss how investing has transformed in the 21st Century and what new challenges have emerged because of it; the tragedy of value capture; the push and pull between sustainability and efficiency; the consequential differences between risk and uncertainty, problems and mysteries; how multiple timescales interact to produce complexity in the market; balancing growth and development; and what all this means for those who want to do good and not just well with their investments…
If you value our research and communication efforts, please subscribe to Complexity Podcast wherever you prefer to listen, rate and review us at Apple Podcasts, and/or consider making a donation at santafe.edu/podcastgive. You can find numerous other ways to engage with us at santafe.edu/engage. Thank you for listening!
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Podcast theme music by Mitch Mignano.
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Related Reading & Listening:
Katherine’s Website (where you can buy a copy of The Nature of Investing)
SFI’s Alien Crash Site 12 with Katherine Collins
Re: Putnam’s Sustainable Investing
ESG at Putnam: A Digital Resource Guide
“The coming battle for the COVID-19 narrative” by Samuel Bowles & Wendy Carlin
“Economics in Nouns and Verbs” by W. Brian Arthur
“Group Decisions: When More Information Isn’t Necessarily Better”
Complexity 35, 36: Scaling Laws & Social Networks in The Time of COVID-19 with Geoffrey West
Complexity 62, 63: Mark Ritchie on A New Thermodynamics of Biochemistry
Complexity 13, 14: W. Brian Arthur on The History & Future of Complexity Economics
Complexity 30: Rethinking Our Assumptions During the COVID-19 Crisis with David Krakauer
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