The Rational Reminder Podcast

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Episode 361: Alex Edmans - Finding "The Truth" in Economics, Finance, and Life

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Jun 12, 2025

Guest

Alex Edmans

In this engaging discussion, Alex Edmans, a Professor of Finance at London Business School and author of 'May Contain Lies', delves into the world of misinformation and confirmation bias. He shares insights on how biased interpretation affects governance and decision-making, particularly in shaping laws. The conversation explores the pitfalls of black-and-white thinking and critically evaluates popular claims like the 10,000-hour rule. Edmans emphasizes the importance of rigorous data analysis and diverse perspectives for discerning truth in economics and beyond.

01:05:20

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ANECDOTE

Why We Sleep's Data Omission

'Why We Sleep' by Matthew Walker selectively omits data that contradicts its claims.
The book also exaggerates the author's scientific credentials, undermining its credibility.

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ADVICE

Verify By Seeking Disconfirming Evidence

To verify statements, search for disconfirming evidence and examine original sources.
Reading critiques and underlying data helps reveal selective reporting or misinformation.

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INSIGHT

Facts Are Not Data

Facts alone are not data; they can be cherry-picked or selective stories lacking broader context.
Large datasets and systematic evidence are necessary to move from anecdote to reliable data.

Get the Snipd Podcast app to discover more snips from this episode

The Dangers of Confirmation Bias in Governance

03:15 • 18min

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The Dangers of Black and White Thinking

21:25 • 7min

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Unpacking the Myths of Mastery and Practice

28:18 • 4min

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The Pitfalls of Cherry-Picked Evidence

32:18 • 21min

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Navigating Data Evidence and Causal Relationships

53:01 • 10min

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The Allure of Confirmation Bias in Economic Perspectives

01:03:08 • 2min

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#9154

• Mentioned in 6 episodes

Grow the Pie

How Great Companies Deliver Both Purpose and Profit

Alex Edmans

In this book, Alex Edmans presents a compelling case that companies do not have to choose between generating profits and serving societal needs. He introduces the concept of 'Pieconomics,' which emphasizes growing the aggregate benefits (the 'pie') rather than just redistributing them. Edmans provides evidence-based analysis and practical advice on how businesses can integrate social responsibility into their core operations, align executive incentives with long-term goals, and use practices like share buybacks strategically. The book is grounded in rigorous research and includes numerous case studies and examples to illustrate how companies can achieve sustainable success while contributing to societal well-being.

#45

• Mentioned in 259 episodes

Why We Sleep

Matthew Walker

This book delves into the purpose and power of sleep, explaining how it affects every aspect of our physical and mental well-being. Walker discusses how sleep enriches our ability to learn, memorize, and make logical decisions, recalibrates our emotions, restocks our immune system, fine-tunes our metabolism, and regulates our appetite. He also explores the consequences of sleep deprivation and provides actionable steps to improve sleep quality, including ways to prevent cancer, Alzheimer’s, and diabetes, slow the effects of aging, and increase longevity.

#4287

• Mentioned in 11 episodes

May Contain Lies

Alex Edmans

#90

• Mentioned in 188 episodes

Outliers

The Story of Success

Malcolm Gladwell

In 'Outliers: The Story of Success', Malcolm Gladwell examines the often-overlooked factors that contribute to high levels of success. He argues that success is not solely the result of individual talent or hard work, but rather is influenced by a complex web of advantages and inheritances, including cultural background, family, generation, and luck. The book delves into various examples, such as the success of Bill Gates, the Beatles, and Canadian ice hockey players, to illustrate how these factors play a crucial role. Gladwell also discusses the '10,000-hour rule' and the impact of cultural legacies on behavior and success. The book is divided into two parts: 'Opportunity' and 'Legacy', each exploring different aspects of how success is achieved and maintained.

#64

• Mentioned in 230 episodes

Grit

The Power of Passion and Perseverance

Angela Duckworth

In this book, Angela Duckworth presents a compelling argument that success is driven more by grit, a fusion of relentless passion and perseverance, than by talent. She explains what grit is, how to identify and develop it, and how it can be grown through stages such as developing interests, consistent practice, finding a pro-social purpose, and cultivating optimism. The book is structured in three parts: explaining what grit is and why it matters, how to grow grit from the inside out, and how to grow grit from the outside in, targeting parents, coaches, teachers, and organizational leaders. Duckworth supports her arguments with personal stories, historical insights, and interviews with high achievers from various fields.

#61

• Mentioned in 232 episodes

Start with Why

How Great Leaders Inspire Everyone to Take Action

Simon Sinek

In 'Start with Why', Simon Sinek introduces the concept of 'The Golden Circle', which consists of 'Why', 'How', and 'What'. He argues that successful leaders and organizations start with their purpose or 'Why', which inspires loyalty and trust. Sinek uses examples such as Apple, Martin Luther King Jr., and the Wright Brothers to illustrate how this approach can lead to significant influence and success. The book emphasizes the importance of leadership and purpose in inspiring others and achieving long-term success.

Today, Ben plays lone host for the first time as we welcome Alex Edmans to the show. Alex is a Professor of Finance at London Business School as well as an accomplished speaker, author, investment banker, and financial advisor. To start, Alex describes his involvement in the formation of a new law in the UK before defining 'misinformation' and where confirmation bias fits in. Then, we assess the impact severity of confirmation bias, biased search versus biased interpretation, the role of generative AI in confirmation bias, and the levels of susceptibility within confirmation bias. We also explore the role of black-and-white thinking in concealing the truth, Alex's Ladder of Misinference as seen in May Contain Lies, the 10,000-hour rule and other famous statements of misinformation, and how the idea of a narrative may influence how people interpret and misinterpret facts. We end with how to guard against the plague of data mining in research, data as evidence and what this implies for evidence in financial economics, and Alex shares helpful advice for determining truth in any circumstance.

Key Points From This Episode:

(0:03:27) Alex Edmans walks us through the erroneous evidence that influenced a new UK law.

(0:07:13) Misinformation; living in a post-truth world; and where confirmation bias fits in.

(0:12:06) The severity of confirmation bias, and biased search versus biased interpretation.

(0:18:19) Unpacking generative AI and the susceptibility thresholds of confirmation bias.

(0:21:25) How black-and-white thinking makes the truth more elusive.

(0:25:40) Understanding Alex's Ladder of Misinference as seen in May Contain Lies.

(0:28:17) Debunking the 10,000-hour rule and other enduring statements of misinformation.

(0:38:10) The second step on the Ladder of Misinference: Why facts are not data.

(0:42:42) How the idea of a narrative influences how people interpret or misinterpret facts.

(0:44:25) Why data is not evidence, and examining the plague of data mining in research.

(0:48:36) Guarding against data mining and the consequences of investing with misinformation.

(0:53:01) When data is evidence, and what this says about evidence in financial economics.

(0:55:49) Why evidence may not be proof.

(0:59:14) Practical advice for seeking the truth for important decisions and in everyday life.

Links From Today's Episode:

Meet with PWL Capital — https://calendly.com/d/3vm-t2j-h3p

Rational Reminder on iTunes — https://itunes.apple.com/ca/podcast/the-rational-reminder-podcast/id1426530582. Rational Reminder Website — https://rationalreminder.ca/

Rational Reminder on Instagram — https://www.instagram.com/rationalreminder/

Rational Reminder on X — https://x.com/RationalRemind Rational Reminder on TikTok — www.tiktok.com/@rationalreminder

Rational Reminder on YouTube — https://www.youtube.com/channel/

Rational Reminder Email — info@rationalreminder.ca Benjamin Felix — https://pwlcapital.com/our-team/

Benjamin on X — https://x.com/benjaminwfelix

Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/

Alex Edmans — https://alexedmans.com/

Alex Edmans on LinkedIn — https://www.linkedin.com/in/aedmans

Alex Edmans on X — https://x.com/aedmans

London Business School — https://www.london.edu/

Fulbright Fellows | MIT — https://ir.mit.edu/projects/fulbright-fellows/

Atkins — https://www.atkins.com/

'Matthew Walker's "Why We Sleep" Is Riddled with Scientific and Factual Errors' — https://guzey.com/books/why-we-sleep/

'Grit: The Power of Passion and Perseverance | Angela Lee Duckworth | TED' — https://www.youtube.com/watch?v=H14bBuluwB8

Books From Today's Episode:

May Contain Lies — https://maycontainlies.com/

Grow the Pie — https://mybook.to/Grow-the-Pie

Outliers — https://www.amazon.com/Outliers-Story-Success-Malcolm-Gladwell/dp/0316017930

Why We Sleep — https://www.goodreads.com/book/show/34466963-why-we-sleep

Start with Why — https://www.amazon.com/Start-Why-Leaders-Inspire-Everyone/dp/1591846447

Grit — https://www.amazon.com/Grit-Passion-Perseverance-Angela-Duckworth/dp/1501111108

Papers From Today's Episode:

'CEO-Employees Pay Ratio, Employees' Productivity and Firm Performance: Evidence from UK' — https://www.researchgate.net/publication/391787593_CEO-Employees_pay_ratio_employees'_productivity_and_firm_performance_evidence_from_UK

'A Theory of Fair CEO Pay' — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4294589

Editing and post-production work for this episode was provided by The Podcast Consultant (https://thepodcastconsultant.com)

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