“The Worst of It Is That the Case That the Rational Man Concept Is a Myth Is So Strong That It Embarrasses the Professionals Who Rely on It for Others to Learn How Faulty Their Analyses Are.”

Set forth below is the text of an e-mail that I sent on December 21, 2018, to Antara Haldar, the author of an article titled Economics: The Discipline That Refuses to Change.

Antara:

My name is Rob Bennett. I loved your article in the Atlantic on “Economics: The Discipline That Refuses to Change.” This issue has become my life for the past 16 years. I didn’t mean for that to happen; it’s a situation that I fell into unknowingly. But I can testify that the practical implications of the problem you discuss are huge. We have as a society the potential to make great strides forward if we become more open-minded in our consideration of economics issues and of causing huge amounts of human misery if we fail to do so.

I have attached an article (“Buy-and-Hold Is Dangerous”) that explores in depth how the outdated Rational Man concept is killing us in the investing advice realm. I’ll note just one example of the problem here. Stock prices went up by 126 percent from January 1996 through December 1999. If those gains were brought on by the rational assessment of economic realities, that 126 percent gain was extremely good news. It meant that the economy was going like gangbusters and that we were all were richer than we were before. However, if those gains were the result of irrational exuberance (as Nobel-prize-winning Economist Robert Shiller argues), they represented nothing more than a passing, widespread delusion. Millions of investors came to believe that they possessed much more lasting wealth than they did and thus became incapable of making reasoned financial planning decisions.

The worst of it is that the case that the Rational Man concept is a myth is so strong that it embarrasses the professionals who rely on it for others to learn how faulty their analyses are. I describe many cases in the article of people with strong credentials who believe that today’s investment advice is gravely flawed but who are afraid to say so publicly. It is only the advice that has been proven to be in error that can be repeated today because those who offer more realistic advice make those reciting the conventional viewpoints look bad. Yikes!

If you read the article (I hope you do — you possess a rare appreciation of the underlying issues that will enable you to understand it better than most and I have been driven a bit bonkers over the years by the frustrations that I have experienced trying to get the word out), I would be grateful if you would share any reactions that you have or any suggestions for how to proceed in getting more people to talk about this. We are in a Catch 22 — People are afraid to talk about this because they don’t hear others talking about it! It is my strongly held view that those of us who see the problem need to offer each other support so that we can develop the courage to persuade the broader community of people who comprise our nation break this spell we are under.

Thanks again for the good work that you do.

Rob