Issue link: http://www.e-digitaleditions.com/i/100231
ArtB ox/G low I mages tion in the U.S. has created the benefit corporation, a new corporate legal firm halfway between a for-profit and nonprofit. One of the new benefit corporations is Growers��� Secret, a fertilizer company whose products create runoff that is less harmful to the ocean���s nitrogenphosphorus-potassium balance than other products. The young oceanographer who wants to save the seas has finance to thank for this kind of company. It shouldn���t be surprising that finance can have such broad applicability. In my courses, I tell students that finance should never be their only interest, probably not even their main interest. If they want satisfying and meaningful lives, they must develop identities that have some sense of inner purpose. They must have personal goals that stand above finance���even if they use financial tools to realize these goals. Financial tools coordinate the activities of diverse people and allow them to get things done. While I believe finance can be a force for good, it cannot fundamentally change people into pure altruists. The human mind is extraordinarily complex; it has many built-in circuits that are ready to motivate us to produce creations and horrors, whichever the circumstances encourage. Therefore, in designing social and financial institutions, we must work with the degree of altruism that we already have. Behavioral finance, the most exciting development in academic finance over the last couple decades, uses the science of psychology to help us better understand financial markets and how to improve them. It works with the basic human material to create the good society that we aspire to���and that we substantially already have. So many organizations contribute to the creation of this good society. I see the business world as a community of professionals in a number of specialized fields, each with its own culture. There are CEOs, CFOs, CIOs, and COOs. There are investment managers, bankers, and investment bankers. There are mortgage lenders, traders, and market makers. There are insurers, market designers, and derivatives providers. There are business lawyers, financial advisors, accountants, and auditors. In the related sphere of government, there are regulators and information providers and public goods financiers. These specialties all support professional organizations that determine and reinforce professional standards. Such organizations also help define acceptable behavior by acting as selfregulators and by working with lawmakers to create government regulations. Even lobbyists���who sometimes seem to have an excessive amount of influence over government���can be part of the good society. All major interest groups need advocates to represent their interests and professional opinions to the government. Lobbyists can play that role well, as long as they act with integrity and as long as there are checks in place to balance their power. Working together, professional groups, lawmakers, and lobbyists can make progress in stamping out sleazy behavior in the business world. Our business students will need to take their places in this world; they will need to use their memberships in one of these professional communities to achieve some of their own deeply held ambitions. But it���s up to educators to help them understand the complexity of professions within the financial and business world and the roles those professions play in our society. It���s up to educators to convey to students the richness of our financial culture and its institutions���and to show students how they can use financial innovations to advance the culture and improve the world. Robert J. Shiller is the Arthur M. Okun Professor of Economics in the department of economics at Yale University in New Haven, Connecticut. He is also professor of finance and Fellow at the Yale School of Management���s International Center for Finance. He originally wrote Finance and the Good Society for students in his introductory finance class at Yale and their counterparts who access the course free online through Open Yale. BizEd January/February 2013 67