A tough-minded study that shows there’s gold in them there halls, but getting to it is a problem—or, an entrepreneur might...

CLASS CLOWNS

HOW THE SMARTEST INVESTORS LOST BILLIONS IN EDUCATION

Why can’t Johnny make a buck in the school game? Perhaps because, though the potential earnings are huge, the barriers to entry are formidable, as a former investment banker and current business professor charts.

“Some of the most respected minds of our generation have invested many billions of dollars in for-profit education enterprises,” writes Knee (Professional Practice/Columbia Business School; The Accidental Investment Banker: Inside the Decade That Transformed Wall Street, 2006, etc.). “And, with surprising regularity, they have lost their shirts.” One of the four case studies is that of Chris Whittle, the media maven–turned–educational entrepreneur: “What is surprising, even shocking, is that for over twenty years, in the educational arena, Chris Whittle has been able to continue to separate sophisticated investors from their money despite a plethora of red flags that in any other context might be viewed as disqualifying.” Even so, Whittle’s venture into the educational market had a solid basis, if you consider that the sector amounts to something like $1.3 trillion, mostly funded from government sources. That explains why sullied investor Michael Milken turned to the education market with an enterprise that, it seems, failed to recognize what to Knee seems obvious: that some markets, especially higher education, are tough to crack, such that only one school, Stanford, has managed to join the world’s elite institutions in the last half-century. The author’s dissections of various sectors of the market, from textbook publishing to child care centers, point to a common lesson, namely that most of it does not respond to the traditional economics of scale. School governance tends to be intensely local, for instance, and thus “a major textbook publisher must produce literally hundreds of thousands of SKUs of its core products to respond to local requirements.” It’s a hard arena even for a giant to make a living in, much less smaller players, no matter how good and noble the intentions.

A tough-minded study that shows there’s gold in them there halls, but getting to it is a problem—or, an entrepreneur might say, a challenge.

Pub Date: Nov. 8, 2016

ISBN: 978-0-231-17928-7

Page Count: 288

Publisher: Columbia Univ.

Review Posted Online: Nov. 15, 2016

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Striking research showing the immense complexity of ordinary thought and revealing the identities of the gatekeepers in our...

THINKING, FAST AND SLOW

A psychologist and Nobel Prize winner summarizes and synthesizes the recent decades of research on intuition and systematic thinking.

The author of several scholarly texts, Kahneman (Emeritus Psychology and Public Affairs/Princeton Univ.) now offers general readers not just the findings of psychological research but also a better understanding of how research questions arise and how scholars systematically frame and answer them. He begins with the distinction between System 1 and System 2 mental operations, the former referring to quick, automatic thought, the latter to more effortful, overt thinking. We rely heavily, writes, on System 1, resorting to the higher-energy System 2 only when we need or want to. Kahneman continually refers to System 2 as “lazy”: We don’t want to think rigorously about something. The author then explores the nuances of our two-system minds, showing how they perform in various situations. Psychological experiments have repeatedly revealed that our intuitions are generally wrong, that our assessments are based on biases and that our System 1 hates doubt and despises ambiguity. Kahneman largely avoids jargon; when he does use some (“heuristics,” for example), he argues that such terms really ought to join our everyday vocabulary. He reviews many fundamental concepts in psychology and statistics (regression to the mean, the narrative fallacy, the optimistic bias), showing how they relate to his overall concerns about how we think and why we make the decisions that we do. Some of the later chapters (dealing with risk-taking and statistics and probabilities) are denser than others (some readers may resent such demands on System 2!), but the passages that deal with the economic and political implications of the research are gripping.

Striking research showing the immense complexity of ordinary thought and revealing the identities of the gatekeepers in our minds.

Pub Date: Nov. 1, 2011

ISBN: 978-0-374-27563-1

Page Count: 512

Publisher: Farrar, Straus and Giroux

Review Posted Online: Sept. 4, 2011

Kirkus Reviews Issue: Sept. 15, 2011

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Occasionally wonky but overall a good case for how the dismal science can make the world less—well, dismal.

GOOD ECONOMICS FOR HARD TIMES

“Quality of life means more than just consumption”: Two MIT economists urge that a smarter, more politically aware economics be brought to bear on social issues.

It’s no secret, write Banerjee and Duflo (co-authors: Poor Economics: A Radical Rethinking of the Way To Fight Global Poverty, 2011), that “we seem to have fallen on hard times.” Immigration, trade, inequality, and taxation problems present themselves daily, and they seem to be intractable. Economics can be put to use in figuring out these big-issue questions. Data can be adduced, for example, to answer the question of whether immigration tends to suppress wages. The answer: “There is no evidence low-skilled migration to rich countries drives wage and employment down for the natives.” In fact, it opens up opportunities for those natives by freeing them to look for better work. The problem becomes thornier when it comes to the matter of free trade; as the authors observe, “left-behind people live in left-behind places,” which explains why regional poverty descended on Appalachia when so many manufacturing jobs left for China in the age of globalism, leaving behind not just left-behind people but also people ripe for exploitation by nationalist politicians. The authors add, interestingly, that the same thing occurred in parts of Germany, Spain, and Norway that fell victim to the “China shock.” In what they call a “slightly technical aside,” they build a case for addressing trade issues not with trade wars but with consumption taxes: “It makes no sense to ask agricultural workers to lose their jobs just so steelworkers can keep theirs, which is what tariffs accomplish.” Policymakers might want to consider such counsel, especially when it is coupled with the observation that free trade benefits workers in poor countries but punishes workers in rich ones.

Occasionally wonky but overall a good case for how the dismal science can make the world less—well, dismal.

Pub Date: Nov. 12, 2019

ISBN: 978-1-61039-950-0

Page Count: 432

Publisher: PublicAffairs

Review Posted Online: Aug. 29, 2019

Kirkus Reviews Issue: Sept. 15, 2019

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