Odd Lots Dan Ariely on How To Win Big by Betting on Human Capital
Jun 3, 2021
Dan Ariely, a renowned behavioral economist from Duke University and co-founder of Irrational Capital, discusses the future of investing through the lens of human capital. He argues that companies nurturing their employees tend to outperform in the market. The conversation delves into measuring intrinsic workplace factors like employee appreciation and gender equality. Ariely highlights how corporate culture can enhance valuations and performance, alongside the significance of social metrics in ethical investing. It's a thought-provoking look at the intersection of behavior and finance.
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Pizza vs. Bonus
- A delivered pizza can motivate employees more than a bonus, highlighting the impact of appreciation.
- Irrational Capital's research aims to find signals of employee appreciation that predict stock returns.
Data Collection
- Traditional financial data is easy to access, while human capital data requires different sources.
- Irrational Capital uses surveys and other data to measure employee sentiment and predict stock returns.
Gender Equality and Performance
- The SHE Index, focusing on women in leadership, underperforms the S&P 500.
- Irrational Capital's data shows that gender equality in treatment, not just representation, drives stock performance.