"Academics are to knowledge what prostitutes are to love” – Nassim Nicolas Taleb
Ok, ok, I will start with the disclaimers: This is a generalization. This does not apply to every field. There are also great academics.
I studied business and finance and I have suffered all kind of academics for 5 years. I learned nothing useful from most of them. And I think that these problems apply to every “social science” a.k.a. pseudoscience (economics, business, finance, sociology, etc.) but it is not clear to me if it is extended to hard/real sciences (maths, physics, engineering, etc.)
To explain my points, I will use examples from business and finance.
Problem #1: Academics have a clear conflict of interest when they combine teaching and researching activities: They do not teach what students need to succeed in their jobs, but what is more convenient for them.
What most undergraduate students need to learn at university is quite basic and general, i.e., generalities of markets, valuation, financial statements, etc. However, these fields have already been researched by “leading worldwide academics”, so second-tier or mediocre academics need other less pressing issues/techniques/methods/ideas to research. Then they teach their own research to students. This is both convenient and advantageous for them because (i) they obtain time synergies from researching and teaching the same thing, and (ii) it is in their best interest to share, publish and expand their work.
The consequence for students of business and finance is that they finish university without performing a real DCF, public comps, or precedent transactions in excel, but they read hundreds of academic papers of no importance about shitty CAPM tests.
Problem #2: Academics lack practical experience and feedback-loops from the real world, so their teachings and methods do not work in practice
How many of you have “optimised” portfolios with pen & paper? Or used “modern finance theory” that no single practitioner uses? It seems to me that university professors of finance think there is no difference between academia and the real world. And this could not be further from the truth. There are examples of academics that share interesting insights (Damodaran, Greenwald, or Mauboussin come to my mind), but these are the exception to the rule.
Don’t get me wrong, this is not about theory vs practice. This is about (i) knowing what content is relevant for students that do not aspire to work in academia, and (ii) Using the right tools and updated content.
I believe that in most cases the only thing you can learn from a business school professor of finance is how to become a business school professor of finance.
For more insights into this topic, I would recommend Economic Facts and Fallacies by Thomas Sowell and The Fiat Standard by Saifedean Ammous.
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