除非你是一名注册会计师或企业家，不然可能并不太愿意去了解财务知识。虽然普通人不一定需要能够阅读公司资产负债表，但Ed deHaan教授表示，对财务知识的深入了解—更熟练地掌握“商业语言”—可以帮助每个人更好地了解自己的财务状况并做出更明智的决策。
作为斯坦福商学院的会计学教授，deHaan专注于研究和教授财务报告、公司治理、家庭财务和市场监管等课题。他在自己的许多研究中都发现，从普通的信用卡用户到金融行业的专业人士，很多人都没有足够的金融知识水平。在本期播客中，他探讨了鉴于金钱在个人和专业领域中的重要性，会计原则为何至关重要。
虽然围绕预算、投资、债务等的财务决策可能会让人感到不知所措，但根据deHaan的说法，理财教育是让人们为金钱成功做好准备的第一步。“我们没有教会所有的初中生和高中生如何去管理家庭财务，理解信贷、利息和风险等问题，这太疯狂了。” 他说。
谈到驾驭复杂的金融产品，deHaan警告说，机构比消费者具有系统优势，就像赌场比赌徒具有优势一样。“你需要认识到，平均而言，庄家总是会赢。你要假设自己是与最聪明的扑克玩家对战，而不是你的邻居。” 他建议道。
这并不意味着金融服务本质上是欺骗性的。但缺乏透明度，再加上人类的非理性倾向，往往会导致可预测的财富从个人手中转移。“有大量关于我们所犯的系统性错误的研究。” 他说，“我们常常对系统的公平性过于自信。你需要货比三家，需要保持怀疑态度，并阅读细则。外面的鲨鱼总在寻找小鱼。”
随着新技术和金融产品使股票交易、投资和先买后付变得比以往任何时候都更加容易，deHaan认为现在比以往任何时候都更需要金融智慧。“人们甚至在早上起床前或晚上喝完三杯酒后，只需轻轻一划手指就可以进行交易。” 他说，“投资或承担债务的方式无处不在，而且这种方式正在迅速扩张，这是一个令人担忧的巨大原因。”
通过提高金融素养，deHaan相信，我们可以使消费者更知情，也可以使领导者更好地利用金钱作为向善的力量。要做到这一点，我们必须学会说“商业语言”。
以下为本期播客的文字整理稿：
Kevin Cool: If we want to make empowered decisions, then we need to care about accounting.
Grant Means: No matter what somebody does for a career, they earn money.
Kevin Cool: Grant Means is a personal finance coach to people of all ages and different professions. He is trying to help Kai, an employee of a biotech startup, make sense of her relatively new and somewhat complicated compensation.
Chai: So when I started, they gave me cover money, shares, RSUs. And I’m not entirely certain about all of the exact terms. I just know that was in addition to the base salary and any bonuses when you’re here.
Kevin Cool: And to make matters harder, her employer’s stock price goes up and down depending on the breakthroughs it may or may not make.
Grant Means: There’s all these terms. It almost feels paralyzing. You don’t know exactly what to do. And then all along the way, there’s this volatility.
Kevin Cool: So over a Zoom session, Grant coaches Kai through this struggle by asking about her financial goals.
Kai: So definitely saving up for a house; investing in — er, getting another car; taking care of parents as they age, and also children. So I think just educating myself and knowing how to do that effectively would definitely allow me to feel better about putting my money in places where I know it’s not too risky, where I might lose money.
Grant Means: It’s important to understand your own personal risk tolerance.
Kai: I think one of the issues is that I’m so risk-averse.
Grant Means: Risk-averse?
Kai: Yeah.
Grant Means: Well, it’s interesting because, actually, the majority of your finances are extremely risky [unintelligible]. But at least the majority of your net worth, especially as it vests over time, is in something that … It very easily could go to zero if clinical trials don’t go well next week for whatever reason.
Kevin Cool: Grant tells Chai about a fundamental concept of investing.
Grant Means: There’s this principle called diversification: taking risk and spreading it around. So if you’re able to diversify your finances, then even as some of your dollars are in extremely risky places or relatively risky places, your overall financial risk is actually reduced. It’s kind of crazy. So right now, you’re one of the least-diversified people, actually, in the world because you’re invested in cash and one stock.
Kevin Cool: Chai still struggles to get her head around the financial decisions she needs to make.
Kai: Being here at my company, we’ve had financial advisers, representatives from the bank, coming in at different times to speak to us. And that was just something we never really did when I was going through grad school — not really thinking about how to organize in terms of planning how to [unintelligible] [some money]. It’s very different. So from not really having that to having it. So many choices.
Grant Means: I think we can take what looks like needing to make a decision every paycheck and needing to make a decision every day and every market swing and turn it into just a few well-thought-out decisions that stand the test of time.
Kevin Cool: Chai says she is encouraged by Grant’s advice as she figures out her life plans; but she also reflects on how she can be so educated, with a PhD, and know so little about finances.
Kai: I’m probably not alone in not really thinking about a lot of these things that you probably should think about. That is just maybe something that, growing up, I hadn’t really considered as much. I’m not saying that what we learned in school wasn’t useful, but I think — you know, even elementary, high school, I feel like there could have been maybe more of an emphasis on things that were practical, like life skills and managing your finances. And that was just one thing that was quite glaringly not present.
Kevin Cool: Even if Chai doesn’t yet know exactly what to do, she at least has a better understanding thanks to the kind of advice Grant offers. And she’s not alone. At work or at home, knowing about finance and basic accounting can help people make more-empowered decisions. That’s our focus today.
This is If/Then, a podcast from Stanford Graduate School of Business, where we examine research findings that can help us navigate the complex issues facing us in business, leadership, and society. I’m Kevin Cool, Senior Editor at the GSB. Today we speak with Ed deHaan, Professor of Accounting.
Ed deHaan: I think it’s wild that we are not teaching all of our middle schoolers and high schoolers how to manage household finance, understanding things like credit and interest and risk, so that when they go off to college or they go into the world and start working, they have some understanding of this.
Kevin Cool: I want to start by talking about … You have a broad set of work around financial literacy in various settings. And we’re going to get into that, but I want to start with a more basic question, which is: If I’m not an accountant, and I don’t plan to be an accountant, why should I care about accounting?
Ed deHaan: One answer is that, hopefully, on a day-to-day basis most of us don’t need to care about accounting. Accounting is what they call the “language of business.” It’s the backbone of communication within organizations and from organizations to outsiders. When it’s working as designed, the only people who need to worry about it are the accountants; the managers who are using the accounting reports — but hopefully they’re just using them as they are, without having to give it a lot of deep thought to where they come from; and then the industries who analyze the reports.
So when it works, it facilitates everything in business. Internally what’s called “managerial accounting” is all the information that companies need to produce and use to run that business efficiently. “Financial accounting” is how people outside of the organization use financial information, what information they want, how companies produce it and communicate it.
When it’s working well, it’s working well. And when it fails, we see catastrophic problems. Organizational failures. We can even see situations like bank failures, which we just observed here locally. Enron, parts of the financial crisis, were due to accounting failures. So every 10 years or so things blow up, and we try to avoid that as much as possible.
Kevin Cool: Right. If I am a leader in an organization, what is my responsibility to the employees in terms of their financial literacy and understanding of what it is, how their money is being managed?
Ed deHaan: So I think there’s a couple of different ways we can think about this. I’ll start with an example of my own research from a few years ago, where we looked at S&P 500 index funds. We showed, even among these identical index funds, some are charging, say, 2 basis points a year — so they’re practically free; it’s a great deal — and some are charging up to 500 basis points a year for functionally the same thing. Now, 500 basis points here is 5 percent a year, which means that if somebody has invested $100 in this, they’re down to $95 before anything else happens.
Now, interesting: I presented this at a university — I think it was at University of Texas — where somebody in the room was a professor and was on the board that oversaw the retirement choices for University of Texas employees, and was shocked at this disparity in fees.
And so this is somebody who works in a business school and who, presumably, has better-than-average knowledge. So I think there is — I don’t know if the word is “responsibility,” but I think there’s a benefit to employers to keeping a careful eye on what’s in these retirement plans, making sure that their employees are getting good options that are going to make them wealthier and them happier, which ultimately makes them happier working for the organization.
Another completely different way we can think about this is the financial performance of the company itself. And I think it — you know, maybe at face value you would think, “Yeah, the average employee cares about whether the company they’re working for is doing well or not.” One big thing is: Is the company going to be here in five years?
But what our research shows is that employees actually care about the financial performance of the company perhaps far more than the average manager realizes. They probably think, “Oh, I put out these earnings announcements; and the IR teams, the institutional investors, they get involved.” What we find is that employees are remarkably sensitive to the information that’s contained in these earnings announcements, and it has a major impact on their decisions about whether to stay working for a company as well as their decisions about where to go work in the future.
Kevin Cool: In those cases, would you say that employees understand those earnings reports? Are they interpreting them accurately?
Ed deHaan: My suspicion is no. The average person outside of Wall Street really struggles to understand the financial performance of a company. If I gave you, or gave even any of my students who have taken my class, the earnings announcement, they would maybe be able to get the basics; but it’s really complicated to understand what accounting reports say and what this means for the future of the company.
So what we actually find in our research is that the number one way that employees appear to learn is from the media coverage of those earnings announcements. So it’s how the media are talking about it. The average reporter is probably a bit more savvy than the average person — Wall Street Journal reporters are very savvy — but that doesn’t mean that they even get it right all the time.
Kevin Cool: So let’s walk through a typical earning report. How should an employee interpret that? What should they be looking for?
Ed deHaan: Yeah, so I think advice that goes for almost any industry is you have to have a long-term perspective — not 10 years, because that’s probably longer than the average person works for a company; but certainly not just one quarter, either. I think we get overly fixated on “Did this quarter’s earnings hit the analysts’ forecast or what the Street was expecting?” There’s just a lot of randomness in every quarter, so I wouldn’t focus too much on that.
I would be thinking more like, “How long would I like to work for this company? Two, three, four years?” and, “What is the company’s prospects looking like over that longer-term perspective?” I certainly wouldn’t be following the company’s stock price on a daily basis. This is just a recipe for madness.
But that longer-term perspective that you could get from reading thoughtful media articles: Wall Street Journal type articles, New York Times articles. I almost certainly would ignore everything on social media. Most of that is designed to get clicks and to attract attention, and long-term predictions are generally not click-worthy. So I think I would be thinking about that.
You also want a company that’s relatively consistent with their plan. If each quarter or once a year they’re coming out with some radical shift, what we might call a restructuring — you know, we’re completely changing our vision; we’re shutting down branches — this is probably an indicator that there’s a lack of stability at the senior-leadership levels, which, for many employees, is probably not so desirable if this is a job that you’re hoping to stay and grow within.
Kevin Cool: Do you think companies … Are companies aware of the mindset or the effect that these reports can have on employees?
Ed deHaan: Yeah, I’m not sure if the average manager is aware of this. I think the easy and the obvious answer is: Company is doing well; employees are happy. Company is not doing well; employees are going to start looking for another job. And that is certainly true. But this thing that we call “résumé value” is really important, as well: that employees want their résumé to reflect organizations that they’re proud of, that the outside market values — “outside market” being other employers. When the company is doing well, that increases the résumé value.
Kevin Cool: Sure.
Ed deHaan: So there is this maybe counterintuitive finding that when the company really has a great quarter, it’s not necessarily that their employees want to stay even more, but some number of employees think, “This is my time to move. This is when I can capitalize on the résumé value of my company.”
Kevin Cool: So if we have a situation where people are acting, to some degree, on reports that they don’t understand, how do we remedy that?
Ed deHaan: If I was a manager advising managers, I would say, “We think a lot about how to communicate financial information to our investors and maybe to our lenders. Maybe what we should do is think more about how we communicate this financial information to our employees so that they understand it.”
So some companies do now have internal conference calls that follow the public conference call with all the analysts. These things are all hands, or at least all available — anybody can log on — and the CFO or the CEO will help the employees interpret what’s happening and will talk to them about the future of the company.
Kevin Cool: You’re listening to If/Then, a podcast from Stanford Graduate School of Business. We’ll continue our conversation after the break.
[Pause]
Kevin Cool: So let’s pivot and talk about household finance. Some of your research has dealt very directly with this. How common is it for people to lose out when they’re working with companies that have a very sophisticated understanding of this and they have a very unsophisticated understanding of it? What’s the danger here? And can you offer some examples about mistakes people make, either in investing or how their money is being managed?
Ed deHaan: Yeah. I think the best analogy when thinking about the financial sector as a normal person interacting with financial products, whether it’s choosing which stocks to invest, which credit cards to have, which savings products to use — the best analogy is a casino. When you walk into a casino, you expect to, on average, lose money to the casino. The casino is much more sophisticated than you are.
Kevin Cool: The house always wins.
Ed deHaan: The house always wins. And even if you’re a poker player playing against other poker players, probably there’s better poker players than you in the room. So this is the attitude, I think, we need to have.
Now, it’s fair: The casino provides you a benefit, and they should make some money. And in the same way, in the financial sector, if a company is providing you a credit card or an index fund or a mortgage, they need to make money. That’s how they do it if they’re providing you financial advice. We just don’t want them to have too much of it. Right? You want a balance so that the companies make a profit and people can prosper.
So I think we need to go into this recognizing that you are going to pay, and you are going to lose on average, particularly when you’re making a stock trade. If you are making a trade, you are making a bet, and somebody is on the other side of that. So assume that you are playing against the smartest poker players in the world, not your neighbor.
So in terms of the mistakes that people make, there was a huge amount of research on the systematic errors that we make — these decision errors, these processing errors. Much of it goes back to Kahneman and Tversky, the sort of seminal psychologists. Tversky won a Nobel Prize for this. And we see this all the time in financial markets, things like: We are quick to recognize our gains and quick to forget our losses.
So somebody might say, “Oh, I made a ton of money in the market last year.” And that’s true — maybe they made some really good bets that paid off — but they also lost a lot of money in small bits and pieces. And you put those together: It ends up worse than if they just invested in an S&P 500 index fund. This result has been replicated time after time after time. We have this overconfidence in our ability to invest, and we lose out as a result.
I think another systematic mistake that we make is we have an overconfidence in the fairness of the system. If you think: I’m going to go out and get a credit card. Maybe they’re all the same. I’ll look at two or three. I’ll pick the one that seems to have the best website. Something like this, making these arbitrary — not arbitrary but sort of relatively surface-level decisions. This is a mistake. You need to comparison-shop. You need to be skeptical and read the fine print as much as you can because there are sharks out there who are just looking for minnows.
Kevin Cool: Are there any interventions? Obviously regulation is an important part of this, but are there any interventions that we should be thinking about to protect people?
Ed deHaan: The regulations or the interventions that I would recommend differ depending on what type of product we’re talking about. I think financial education is probably the biggest bang for the buck across all of those.
I think it’s wild that we are not teaching all of our middle schoolers and high schoolers how to manage household finance, understanding things like credit and interest and risk, so that when they go off to college or they go into the world and start working, they have some understanding of this. So there’s some great work being done already here at GSB with Annamaria Lusardi on education starting at a very low level, young people, with financial literacy. So I think that’s first and foremost.
Second, I think that we have some good regulations in place already, but the financial services sector moves more quickly than regulators. So one good example is Buy Now, Pay Later. You might have seen this. It’s popped up everywhere in the last couple of years. Double-digit growth rates year over year. Young people are using this for every transaction.
Now, essentially, that’s like a credit card. There’s no real difference here. But the way that the fintech companies have structured this, it falls outside of the usual regulations around credit cards.
So you don’t have protections, like very clear disclosures that are designed to help everyday people understand the fees they’re going to have to pay. Basic fraud protections. Communications from the Buy Now, Pay Later providers to credit bureaus, which is a really important part of our system for preventing people from what we call debt-stacking, meaning that you max out one credit card; you get another. You max that out; you get another. You max that out, and before you know it, you’re in a hole you can never dig your way out of.
So Buy Now, Pay Later — or BNPL — is outside of that sector right now. New York state actually is going to be the first state that is going to be starting to regulate this, but it’s taken three-four years for anybody to make that first move.
Kevin Cool: So I want to dig into this a little bit more and ask you how worried you are. You mentioned the “pay later” situation. I know if you make an Amazon purchase now, often you will get a pop-up that says you can do this in four payments or whatever. And as you say, there are no disclosures about fees or anything like that. Robinhood is an example of a company where you can easily, basically, day-trade. It’s very seamless, kind of frictionless. So there are all of these situations where people can easily spend their money and maybe not have much transparency about what those transactions are like.
Ed deHaan: I’m hugely concerned about this. I think, going back to my “casino” example, it would be the equivalent of a casino popping up on every street corner and that if you can see above the jackpot machine, you can pull the lever — you know, this level of protection. Certainly there’s nothing in Robinhood that prevents a 16 year old really from going on and trading. Even if it’s against their terms of service, you can do it.
So I think the ubiquity of ways to invest or to take on debt, and how quickly this is expanding, is a huge cause for concern. I think research has shown time and time and time again that people lose money in the stock market.
I have a study that’s just coming out now where we try to investigate what we call the protectionary effects of trading hours. So until recently, if you wanted to trade, you had to trade from 9:30 AM to 4:00 PM New York time — which, for a California person, essentially means 6:30 AM until 1:00 PM. That’s a form of market-access protection. It’s a friction to engaging in the stock market for people on the West Coast or each time zone moving west.
We do some fancy econometrics there, and what we find, using tax records for the entire U.S. population, is that losing one hour of morning trading because you’re more likely to be asleep than awake — because you’re trading on New York time — actually results in about a three-percentage-point increase in your net capital gains per year. These are meaningful results.
We also see that, over the last decade, this protectionary effect has dwindled dramatically. That’s because we’re not just picking up trading gains to the New York Stock Exchange during regular hours. We’re now also picking up cryptocurrencies. We’re picking up round-the-clock trading, which you can do on Robinhood — out-of-hours trading, which has become more accessible. So this protectionary effect has waned over time.
I think this is a huge problem. What I’m worried about is that people can trade with the swipe of a finger before they even get out of bed in the morning or after that three drinks at night, and they’re going to systematically transfer money from their bank accounts to the institutions who are taking the other sides of these trades.
Kevin Cool: So let’s talk a little bit more about financial literacy, especially in an educational setting. Some families give their children allowances — $5 a week or $10 a week, however much that is — and part of the rationale, I think, is to give them some very basic experience in handling money. You mentioned earlier the value of savings, delaying the gratification until later. But as they age, what should we be doing to make that understanding a little bit deeper, a little bit more sophisticated? What should we be thinking about?
Ed deHaan: There’s a lot of reasons to give a kid the allowance. Sometimes it’s to motivate them to do their chores. Sometimes it’s to give them some autonomy and start letting them feel more adult. Perhaps what we could think about doing is starting with the basic $5 a week, or whatever it is, and then slowly having them graduate up to larger and larger autonomy over their financials.
So you could imagine a system where, instead of parents taking their child clothes-shopping and paying for it themselves, you come up with a clothing budget of what the parent would spend on the kid per year or per quarter, and then sort of depositing that $200 a quarter or whatever into their allowance account, and then they can go and buy their own clothes. Getting experience with these sort of micro transactions maybe would allow them, when they get to their college years and beyond, to make more savvy decisions about their financials.
This is not within my research, but something I’ve observed across families is just the extent to which parents are transparent with their children about the household finances. Many kids grow up in a back box — you know, the parents pay for things, and they have absolutely no understanding of the parents’ financial situation. That might have all sorts of benefits in not transferring stress to young people when they don’t need it.
But there also is something to be said for helping kids from a young age understand what income is and what a budget is, and why it is that we don’t go on vacations every week and why we don’t have the holidays four times a year or five times a year — things like this — and just making those conversations part of the dinner-table conversation.
I think another part of it, which relates to what we’ve seen in meme stocks and whatnot, is sometimes young people need to feel the pain of their mistakes. So I think following some of the meme-stock and crypto crashes, there was some outcry as to who is going to make these young people whole who have lost their money.
And I think the answer is “Nobody,” that when you touch a stove and you get burned, you get burned. We don’t want people to lose their arm, but we want them to feel enough pain that they won’t touch it again. But I also think young people have a remarkable ability to understand these concepts when presented to them. So I don’t think we should underestimate what they’re capable of.
Kevin Cool: So hearing you talk about these things, it occurs to me that you look at things through a certain lens, through a particular lens. Now, maybe that is as an accounting expert, or maybe it is a mindset. But is it useful for people to apply that sort of lens in other parts of their lives?
Ed deHaan: I suppose the lens I think that I see through is, really, an economic lens. I was an undergraduate business economics major. I did an economics master’s. The accounting PhD much of the first couple of years is, essentially, an economics PhD.
So when I say “economic lens,” what I mean is just a really rational and sober approach to costs and benefits, and thinking carefully not only about the direct costs that you observe in making a transaction or in a decision but, also, the opportunity costs involved with it — all of the indirect things, or what you’re giving up.
Now, that sober and rational approach is really difficult for us to maintain when we are talking about buying things that we want. When it comes to … You’re at the cash register just before the holidays. You see that perfect gift, and you think, “Somehow I’ll just squeeze it out. I’ll somehow manage to pay off the credit card. I’m going to buy that.” But if we could apply that rational lens at each step in our lives, I think this is something I would recommend. I can also tell you it can go too far — you probably don’t want to treat your personal relationships in this way.
Kevin Cool: [Laughs]
Ed deHaan: But at least when it comes to work and it comes to your house finances, trying to step back, being as rational as possible, is beneficial. An example I often give for this is: Pretend you’re not making the transaction, but you’re advising your grandmother about whether she should make the transaction, or your grandfather. What would you recommend to them? And try to follow that advice yourself.
Kevin Cool: Well, thanks, Ed. This was really interesting. I appreciate it.
[Music plays]
Kevin Cool: It might start with knowing how to manage the household budget or understanding how credit cards work, but approaching the world with an accountant’s mindset can help you make all kinds of life decisions, including whether or when to leave your job. If we make sure people start learning about money at a younger age, it should make things easier later in life. As Ed says, we shouldn’t underestimate what young people can understand. Maybe that goes for all of us, whatever age we are.
