Does Finance Benefit Society?
Academics’ view of the benefits of finance vastly exceeds societal perception. This dissonance is at least partly explained by an under-appreciation by academia of how, without proper rules, finance can easily degenerate into a rent-seeking activity. I outline what finance academics can do, from a research point of view and from an educational point of view, to promote good finance and minimize the bad.
Prepared for the 2015 AFA Presidential Address. While a consultant to the PCAOB, the opinions expressed in this paper are my own and do not necessarily reflect those of the Board or the PCAOB as a whole. I wish to thank Sarah Niemann for research assistantship and Nava Ashraf, Luigi Guiso, Oliver Hart, Adair Morse, Donatella Picarelli, Raghu Rajan, Guy Rolnick, Paola Sapienza, Amit Seru, Andrei Shleifer, Amir Sufi, and Paul Tucker for very valuable comments. The views expressed herein are those of the author and do not necessarily reflect the views of the National Bureau of Economic Research.