All Else Equal: Making Better Decisions

Everyday, we participate in seemingly arbitrary but essential choices for society to function. We all agree on what side of the road to drive on, to use paper currency, or to speak the same language. These kinds of choices make up a group’s common knowledge – things that are made blatantly and publicly known. But what about the things that are known, but unspoken? What is the purpose of innuendos, euphemisms, and veiling the true meaning of our words in society? Steven Pinker, an experimental psychologist and Harvard professor, joins hosts and finance professors Jonathan Berk and Jules van Binsbergen to discuss his new book When Everyone Knows That Everyone Knows: Common Knowledge and the Mysteries of Money, Power, and Everyday Life.In this two-part conversation, they explore the psychological and social significance of common knowledge in human interactions, highlighting its complex role in both fostering cooperation and permitting social taboos. They also discuss the intersection of common knowledge with economic behaviors like speculative trading, and the balance between maintaining social norms and fostering open debate in academic settings. Find All Else Equal on the web: https://lauder.wharton.upenn.edu/allelse/All Else Equal: Making Better Decisions Podcast is a production of the UPenn Wharton Lauder Institute through University FM. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

In this engaging discussion, Ludovic Phalippou, a professor of financial economics and author of Private Equity Laid Bare, delves into the rise of private equity. He explores why private markets attract long-term investors, highlighting the balance between complexity and high fees. Phalippou challenges misconceptions about superior returns and discusses the hidden costs in private equity, urging transparency. He also shares insights on the role of mega asset owners and the evolving landscape of investment performance, making a compelling case for understanding this dynamic sector.

H.R. McMaster, a former U.S. National Security Advisor and military strategist, shares his insights on U.S. intelligence errors. He discusses how the U.S. often overestimates enemy capabilities, drawing on historical misjudgments and the complexities of modern proxy warfare. McMaster highlights the need for a balanced view of threats, especially concerning China and Iran. He also explores the impact of information warfare and the challenges of understanding authoritarian regimes, emphasizing the importance of critical assessment in intelligence.

As the New York City mayoral race heats up, rent control takes center stage. The hosts dissect the historical failures of rent control, comparing the housing crises in Chicago and San Francisco. They delve into how price caps can increase demand and reduce housing supply, leading to long-term negative effects on development and maintenance. The discussion also turns to the motives behind rent control and whether it truly benefits families or just distorts the market. Ultimately, they question if the benefits really justify the hefty costs.

Investment advice is everywhere, but how do you determine what's credible? The hosts dissect internet stock picks, revealing potential red flags like pump-and-dump schemes. They explain why genuine stock pickers often work in funds rather than message boards. The importance of sound financial advice, particularly in areas like diversification and tax planning, is emphasized. The discussion also covers private investment risks, the need for skilled manager selection, and why retail investors should focus on broad diversification instead of chasing trendy stock picks.

Jeff Hawkins, a renowned neuroscientist and computer scientist, dives into the fascinating distinctions between human brains and AI systems. He explains how the brain functions as a predictive learning system, contrasting it with AI's rely on rigid data models. Hawkins introduces a new, brain-like AI approach that promises efficiencies and fewer errors. He discusses AI's potential societal impact, predicting it will augment rather than replace human jobs, while emphasizing the enduring value of uniquely human skills like creativity and adaptability.

Bryan Caplan, an economist and author of "The Case Against Education," argues that modern higher education mainly serves as a labor-market signal rather than fosters essential job skills. He discusses how most college curricula lack real-world relevance and critiques the emphasis on liberal arts, which caters to a select few. Caplan suggests shifting focus to apprenticeships and on-the-job training as more effective learning methods. The conversation also explores the 'sheepskin effect' and how critical thinking may often stem from selection rather than education itself.

In this discussion, Veronica Rappoport, an Associate Professor at the London School of Economics and former Deputy Governor of Argentina's Central Bank, shares her insights on Argentina's historic inflation crisis. She emphasizes that price caps have exacerbated inflation rather than alleviating it, and debunks myths surrounding them. Rappoport also explores the role of fiscal deficits and government interventions, drawing lessons for countries like the U.S. This candid conversation highlights the complexities of inflation and the need for sustainable economic strategies.

Ludovic Phalippou, a Professor of Financial Economics at Oxford and author of 'Private Equity Laid Bare', delves into the rise of private equity and its allure for investors. He discusses the complexities of monitoring investments in private markets and the vital role of oversight. The conversation examines the tricky nature of measuring performance between private and public markets, as well as the influence of mega asset owners since the 2000s. Phalippou also highlights the importance of choosing appropriate benchmarks for assessing private equity returns.

In this insightful discussion, John Cochrane, a Senior Fellow at Stanford's Hoover Institution, breaks down the complex realities of trade deficits. He challenges the prevailing narrative that blames these deficits for economic woes and rebrands them as capital surpluses. The conversation dives into how trade deficits intertwine with investment patterns and the impact of tariffs, advocating for free trade as a catalyst for growth. Cochrane also addresses the broader implications for inflation and international relations, urging listeners to think critically about current trade policies.