All Else Equal: Making Better Decisions

Victor Davis Hanson, an Emeritus Professor of Classics and military historian, shares his insights on the rise and fall of societies. He delves into the cyclical nature of historical success and complacency, using the decline of Nokia as a modern analogy. The conversation highlights how specialization can lead to prosperity while increasing vulnerability. Hanson examines the paradox of wealthy societies neglecting external threats, and reflects on contemporary existential worries, from climate change to the moral dilemmas tied to modern affluence.

As we ring in the new year, we’re bringing back one of our favorite episodes! Handpicked by Jules and Jonathan, this previous conversation is perfect for starting your year with thought-provoking insights.Are CEOs overpaid? It’s easy to see million-dollar (or even billion-dollar) salaries and jump to conclusions. But those figures might not capture the full picture. So, what really goes into deciding CEO compensation? In this episode, hosts and finance professors Jonathan Berk and Jules van Binsbergen welcome back Dirk Jenter, Professor of Finance at the London School of Economics. Together, they debunk some common myths about how CEO compensation is set, explore the value that CEOs add to firms, and make the case for why CEOs could actually be paid more.  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.

Veronica Rappoport, an associate professor at the London School of Economics and former 2nd Deputy Governor of Argentina's Central Bank, shares insights from her experience during chronic inflation. She discusses why price caps, often proposed as a quick fix, can actually worsen inflation over time. Drawing from Argentina's history, she highlights structural fiscal issues and the pitfalls of government intervention. Amidst challenges, she notes a cautious optimism within Argentina as new political strategies emerge to tackle economic difficulties.

Patrick Awuah, President of Ashesi University in Ghana, shares his innovative vision for higher education. He dives into the controversial topic of legacy admissions, weighing their ethical implications against the benefits of financial contributions. The conversation spans the differences between American and European education systems, exploring how Ashesi balances economic sustainability with inclusivity. Awuah emphasizes the critical need for socioeconomic diversity in university admissions and advocates for merit-based approaches that open doors for all.

Celebrating their 50th milestone, the hosts reflect on critical mistakes in decision-making, emphasizing the dangers of oversimplified thinking. They delve into how informational advantages impact investment choices and explore the complexities of navigating financial regulations. The discussion highlights reputational challenges in higher education and the need for accountability in institutions. With insights from past guests, they critique the balance between truth-seeking and social aims, ultimately advocating for disciplined thinking and critical analysis.

If the purpose of a proxy advisory firm is to gather information and advise shareholders on how to vote, then how do the firms handle the many different goals and incentives each shareholder brings to the table? Where do the proxy advisory firms’ interests truly lie? In this episode, hosts and finance professors Jonathan Berk and Jules van Binsbergen speak with guest Chester Spatt, finance professor at Carnegie Mellon University and former Chief Economist at U.S. Securities and Exchange Commission, about the function and purpose of proxy advisory firms, such as Institutional Shareholder Services (ISS) and Glass Lewis. The conversation delves into the differing objectives and incentives among shareholders and how that complicates the work of a proxy advisory firm. They also discuss how and why proxy advisory firms may purposely foster close votes, and what could serve as better voting benchmarks. 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.

Join Jay Clayton, former chair of the U.S. Securities and Exchange Commission, as he sheds light on the complex world of financial regulation. He discusses how good intentions behind regulation can lead to unintended consequences and stifle innovation. Jay highlights the struggle regulators face in a politically charged environment and the impact of excessive rules on public firms. This conversation dives into the necessity for effective oversight while balancing competition and the importance of addressing core problems before seeking new solutions.

Dirk Jenter, a Professor of Finance at the London School of Economics, joins the hosts to tackle the controversial topic of CEO compensation. They challenge the perception that CEOs are overpaid, emphasizing the complex relationship between CEO salaries and the value they bring to firms. The discussion highlights how CEO transitions influence stock prices and the significant responsibilities these leaders bear. Real-world examples illustrate the nuances of assessing CEO effectiveness and the critical decisions they make that can impact company performance.

Mohamed El-Erian, former CEO of PIMCO and chair of the president's Global Development Council, discusses the sustainability of the US national debt. He explores alternative measures of debt, beyond the debt-to-GDP ratio, and emphasizes historical context and investor confidence. El-Erian highlights the economic challenges posed by demographic shifts and the role of technological advancements like AI in shaping future growth. The conversation raises critical questions about inflation targets and the interplay of national debt with geopolitical stability.

This discussion uncovers the surprising role of corporations as security providers for their employees, challenging the notion of exploitation. The hosts delve into the complexities of job performance, questioning why some underperformers remain employed. By likening corporations to insurance contracts, they reveal how job security is effectively an economic form of risk management. Additionally, they explore the implications of economic downturns on labor dynamics, shedding light on re-employment and wage potential in turbulent times.