Investment Uncut: Alex Edmans - Why do smart people make bad financial decisions?

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In our last episode of Season 6, we speak to author and London Business School Professor Alex Edmans about his book May Contain Lies. We discuss Alex’s focus on bringing his research to practitioners so that it has real world impact, with writing books being one way to achieve this. May Contain Lies is about misinformation, which Alex first reached through his work on sustainable finance (the topic of his previous book Grow the Pie), but the issues are more widespread than this.  

Alex takes us through some of the key topics from the book, including black and white thinking, the use (or misuse) of data and on using resources without checking the facts. True to his focus on helping practitioners improve their practices, he also provides helpful tips on how to avoid pitfalls and make clear, well-informed decisions. Alex highlights reliable sources to use, such as proper scientific journals (which go through peer review), finding scientific consensus (eg looking at Cochrane Reviews on medical evidence), the Annual Review of Financial Economics (which again is peer reviewed) or even Wikipedia (due to the multiple authors likely weeding out misinformation). 

For our Views from the Boardroom section, Letty, Jacob and Mary discuss their highlights of Season 6 and how Letty has found the world of podcast co-hosting. They also touch on what listeners can expect from Season 7, due to start in September! 

What’s one thing you would like listeners to take away?

• To keep an open mind and challenge your thinking. Listen to different viewpoints to broaden your thought process before making decisions. 

Any recommendations?

• Annie Duke’s book Thinking in Bets (see also our previous podcast episode with Annie!  
• A Sustainable Future podcast series by Jason Mitchell 
• All Else Equal podcast series