“Co-Creating as Image Bearing” ft. Yale University’s James J. Choi I Saturdays at Seven – Season Three, Episode Eighteen

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In the eighteenth episode of the third season of the “Saturdays at Seven” conversation series, Todd Ream talks with James J. Choi, Professor of Finance at Yale University and a TIAA Institute Fellow. Choi opens by reflecting upon the current state of retirement savings practices, ones which data indicate accomplish their intended purposes, ones which fail to do so, and ones which offer mixed results. While sliding scales of greater employer contributions designed to incentivize employee contributions are amongst the most common, data indicates employees on the higher ends of pay scales take the greatest advantage. What options are thus also needed to support the retirement efforts of employees who cannot afford to forgo immediate access to five, six, or seven percent of their income? Choi then discusses how he became interested in economics and, in particular, personal finance. Although he found himself exhausted by school at the end of his undergraduate years, he returned to Harvard University for graduate school and encountered mentors who helped shape his vocation and provide him with the tools and temperament needed to succeed in academia. That career in academia has now led Choi to serve for approximately 20 years at Yale University’s School of Management where he found a community which he appreciates and to which he believes he contributes. In order for economists to make valued contributions, he argues humility is a critical virtue. He believes he and his colleagues continuously need to realize that while their work may be of value, their methods may not be able to answer as many questions as they may initially believe. Choi closes by exploring ways economists and the Church can be of greater service to one another, joining forces, for example, in efforts such as poverty alleviation.

Todd Ream: Welcome to Saturdays at Seven, Christian Scholar’s Review’s conversation series with thought leaders about the academic vocation and the relationship that vocation shares with the Church. My name is Todd Ream. I have the privilege of serving as the publisher for Christian Scholar’s Review and as the host for Saturdays at Seven. I also have the privilege of serving on the faculty and the administration at Indiana Wesleyan University.

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Our guest is James J. Choi, Professor of Finance at Yale University and a TIAA Institute Fellow. Thank you for joining us.

James Choi: Real pleasure to be here.

Todd Ream: For almost 30 years, I have benefited from TIAA managing my retirement portfolio and most of the colleges and universities where I served, made a base percentage contribution and then up to a point would increase their contribution as a result of my contribution.

As an economist and a TIAA Institute fellow, what is the logic those institutions are exercising in terms of how they structure their contributions?

James Choi: There’s kind of a benevolent reason for it and a self-interested reason for this. Uh, so the entire kind of 401k 403(b) system arose as an accident of history. This was kind of never intended to be the cornerstone of the American retirement saving system. When it was originally created, it was kind of this thing to funnel a little bit more compensation to top executives once upon time, and then it ballooned and ballooned and it became what it is today.

But, the self-interested reason why these kind of matching provisions exist is that there is a provision in the IRS code that governs these sorts of plans that says that you cannot have too many of the tax breaks go to the fat cats. You need to have broad participation among the employee base in these retirement savings plans. Otherwise the highly compensated employees at the organization have to refund or get a refund of some of their contributions, and thus, they get less of a tax break on their retirement savings.

And so these non-discrimination tests once we’re very challenging sometimes to satisfy. And so the question arose, how can we get the rank and file employees to contribute more savings to these retirement plans? And, you know, one language that we understand is the language of bribery. So we said, you know, well, let’s try to bribe these people into contributing more to their savings. And so that was the origin of the match, that you kind of get people to come into the retirement savings plan by paying them, providing an extra incentive for them to save. And that was one way in which organizations got over the non-discrimination hurdle, by kind of having these incentives.

There’s also kind of a benevolent side, which is I think that many of these employers do care about their employee’s well-being. And there is this feeling that, you know, many of these employees without some help, will not enter retirement with adequate economic security. And so this was another way to funnel some resources into employees retirement savings plans.

I think that for universities there’s another self-interested reason, which is that it is very, very difficult to force tenured faculty to retire. And you know, what you don’t want is a situation where a professor, who’s tenured cannot afford to retire, he or she ends up hanging on much longer than they can really do the job well. And, you know, if they have a nice landing cushion, then that might be a way to help them let go of this job, which is really fantastic, when the time comes.

Todd Ream: Thank you. From the perspective of an economist, then, does the data indicate that the logic that you just shared with us prove successful in the near term for employees or maybe in the long term for employees?

James Choi: So in terms of the objective of getting more employees to contribute and to contribute more, it is modestly successful. It’s not enormously successful, it’s modestly successful. So it does have directionally the effect that people would hope that it has. I think there are kind of two reasons why matching is maybe somewhat obsolete. One is something that was apparent even from the early days, which is that, you know, you’re concerned about people who don’t save, and so you’re trying to match them.

Well, who does not get a match? People who don’t save at all. And so the exact people that are kind of in the most trouble are exactly the people who don’t get any of the benefit from a matching incentive. So that’s kind of a poor targeting that we’d be concerned about.

Uh, second reason why matching might be a little obsolete is that we have this new technology, so to speak, called automatic enrollment, where in the old days, you had to opt in to start saving in your retirement savings plan. we know that if you have to opt out instead, participation rates are very, very high. And so we have this alternative way of getting the rank and file into the retirement savings plans. But nonetheless, matching has stuck around. I think in good part because of historical reasons. It’s very hard for an organization to claw back a match once it’s been instituted. So even though we have this very effective way of getting people into the plan, you just have matching that is that sticks around.

Todd Ream: Thank you. Pretend I’m almost 30 years younger. I’ve got more hair, less waistline, and I’m beginning my career in academia. What advice would you offer me in terms of how to conceptualize preparing for my retirement?

James Choi: That’s a hard question because my future self, 30 years from now who is that guy? He’s kind of related to me, but what does he want, what does he want to do? Very hard to know. Uh, you know, if I look at how my tastes and desires and ambitions have changed over the last 20, 30 years, I’m not the same guy that I was when I graduated from college. So there, there is a bit of a forecasting exercise that you need to engage in which is difficult.

Now setting that aside, I think that what I would advise everybody to do is to just try to have some kind of plan for how much you think you would save each year from now until retirement. So, you know, there’s a standard thing that you have to save like 10% or 15% of your income no matter what, no matter what age you are, no matter what your economic circumstances are. And, you know, there’s virtue to that. Uh, there’s certainly a discipline that’s built through that, but that’s not actually the standard economist’s advice.

Economist advice would say that when your income is relatively low compared to where you’re going to be overall in your career, that’s a reasonable time not to save very much because that’s a time when the extra dollar of spending can actually add to your well-being quite a bit. And it’s when you’re in your peak earnings years, when the extra dollars are a little bit more gravy, that you should be a super saver at that point in time.

Life is complicated. You know, the year that you get married, fantastic year to spend a lot of money relative to the year before, the year after, you know, things happen and, and, and circumstances change from year to year. So what I advise my students is not, you know, slavishly stick to 10% or 15% or 20%, what have you. But figure out how much do you think you can save this year? How much do you think you can save next year? What do you think your earnings trajectory is going to be? And just build out a savings plan over, you know, from now until you retire.

And then kind of add it up and see what, what would that, what would that grow to if you thought, let’s say your savings were gonna grow at, say, 2% above the inflation rate, and does that leave you somewhere reasonable? And if that’s not reasonable, you need to do something because, you know, this is the best case scenario where everything goes according to plan, so to speak. And, you know, life happens, emergencies happen. And so you kind of want to build some resilience into your plan. But even if you know when everything goes according to plan as you expect, if you’re not in a reasonable place, then you need to have a different plan.

Todd Ream: Thank you. If a university were starting from scratch and designing a plan for their employees and, and they existed in somewhat of a political or social vacuum at that time. So there weren’t expectations maybe being brought to the table by virtue of history or culture.

In what ways would you advise those institutions when it comes to structuring their plans they offer their employees?

James Choi: So the first thing that I would do is I would probably not have a matching contribution, but rather structure the employer contributions to be much more oriented or completely oriented towards what I’d call a non-contingent employer contribution. So no matter what you do whether you save, in the plan or not by yourself the employer will kick in x percent of your income into the plan, and a lot of universities do this. So at Yale, I think it’s 5% of your income gets contributed to the plan regardless of what you do. And so that just kind of provides a floor for you and makes sure that you’re accumulating something in the plan over time. So that would be kind of on the contribution end.

And then on the asset allocation end, kind of on the investment end, I do think that the default investment mix that is implemented, not just by universities, but pretty much every employer in the United States is way too conservative. But I think especially for universities where in middle age you’re talking, your workforce, at least in the faculty, are by and large tenured. And so you have incredible job security, which means that your future stream of labor income is like a very low risk bond you’re holding.

And if you have this enormous bond position that’s embodied in your human capital, then that means you can, you should take a considerable amount of risk in your financial portfolio. And so I think that faculty should be a 100% stocks for much of their working life. And that’s not something that you see implemented in these default investment allocations, these target date retirement funds, and partly for regulatory reasons and partly for historical reasons.

Todd Ream: Thank you very much. I want to shift now to asking you some biographical questions and how you eventually came to embrace the calling as an economist, but you earned a bachelor’s degree in applied mathematics from Harvard, worked as an analyst for the management consulting firm, Oliver Wyman, for a year, worked as a research assistant at the National Bureau of Economic Research for another year, and then returned to Harvard to pursue a PhD in economics. What drew you back to Cambridge?

James Choi: I never left Cambridge. I was in Cambridge even during those corporate years. But, you know when I was finishing up college, I was so sick of school. I said, I’m never coming back to school, not for any kind of graduate degree, not for an MBA, not for a PhD, nothing. I’m, I’m sick of this. And then I got a real job and I was like, wow, like this is less fun than being a student.

And you know, one great thing about being a professor is that I don’t have a boss. So the president of Yale works for me. I do not work for her. And that’s I think a wonderful thing. So, you know, I think that there was this sense that I got very early on in my management consulting career that I wanted to be a thinker, not a doer. And there was too much doing and not enough thinking in my job. And I think that the work that we did was good. It was valuable. Somebody should do it, it just wasn’t me.

And so I returned to academia and, you know, there are all sorts of things that are hard and frustrating about being an academic as you well know. But even so, it was not as hard and frustrating as what I found out in the real world.

Todd Ream: At what point did you know economics would play a central role in how you exercised your vocation?

James Choi: You know, this is something that happened I think towards the end of high school where I’ve always been fascinated by human behavior. And I was also reasonably good at math. And so I thought, well, you can use math to try to understand and explain human behavior. And economics was the domain in which that happened. So that was a choice that happened. And yeah, before college, and then I was taking courses, and I thought this was a pretty good fit.

Todd Ream: Immediately after completing your PhD, you began an academic career at Yale’s School of Management, an academic home where you’ve now served approximately 20 years. Perhaps you’ve already said this and indicated this, but would you describe the discernment process that led you to focus on an academic career, in contrast to say, industry or public service? Did you know at the time when you enrolled as a PhD student that you would stay within academia?

James Choi: I think by and large it’s, it’s not advisable to start a PhD at least in economics, unless you want to be an academic. I think that it’s such a long process. Uh, there is a lot of sacrifice of time and income, and actually the entire value system that you’re swimming in when you’re doing a PhD is oriented towards producing professors. And if you go in thinking that’s not what I want to do, then I think it can be kind of a demoralizing experience. That’s it.

You know, it wasn’t that I had to go in and be converted. I was already committed to trying to become a professor when I entered, you know, when I actually applied to the PhD program. And so it was never really a question in my mind that’s the direction that I wanted to go in.

Todd Ream: In your estimation, what did you gain by a career in academia, and then what did you maybe give up by choosing a career in academia, in contrast to say industry or public service?

James Choi: Well, the gain is that you can basically structure your own days and pursue things that you find interesting and to be continually creating. And there are deadlines. I mean, there’s the tenure clock obviously. But the deadlines are not as generally fixed and, and close as they are in other realms of life, and so you have time to try to get the answer really right, or at least as right as you can.

Also the luxury of academia is that if a question’s really hard and not answerable, then you just work on something else. Whereas I think in the real world, you have to make some decisions, and even if there are no good answers, you got to choose something. And so you cobble something together and you kind of go forward. And that’s a necessary and noble task. But maybe less satisfying from an intellectual point of view. And so that’s something that I gained kind of this autonomy, freedom to pursue these questions that are interesting to me which I thought that I could answer fairly well.

And you know, what did I give up? I mean, I think one thing is that I, you know, used to have hobbies and now my research is my hobby, which is fantastic. I don’t miss it at all. But, you know, sometimes people develop these rich lives, hobbies outside of work, and I think that during the PhD, that kind of withered. And not to say that I don’t do things outside of work, but of these elaborate extracurricular pursuits, that’s not something that I really have in my life at this point.

And then, you know, I think that one fact about the academic enterprise is that there’s not kind of this thicket of jobs wherever you might think you want to live. And so it’s a geographic flexibility that I think is lost, where if you think, oh my gosh, like I really feel like I wanted to live in Manhattan, or I want to live in San Francisco. I want to live in Chicago. Well that might happen for you, but it’s not like if I were a nurse or you know, a counselor or something like that, where I choose the place and then I go in. I’m very likely to find a job wherever I want to live. That’s not the case in academia.

Todd Ream: Have any mentors been more formative in terms of your expectations and understanding of the academic vocation than perhaps others?

James Choi: Well, I had two very important mentors kind of coming up. One was my undergraduate advisor Andrew Metrick. Uh, he was on faculty at Harvard. Actually happens to be my faculty colleague here at Yale now. Uh, but that kind of happened years after I’d finished at Harvard, and I think that he was the person who set me on the academic track, even though I was very sick of all the school stuff by the end of my senior year. I started working with him on academic research while I was an undergrad, and I think that it was really inspiring to see what it was like to try to answer a question very, very thoroughly and very correctly, and, and with a lot of passion.

And then I also try to keep in mind how calm he was about everything. Even when I thought, oh my gosh, a disaster just happened in this research project. I’m sure that he was inside feeling very nervous because he was an untenured junior faculty member at the time. But he was very calm, very understanding, you know, and I think that there’s something about always being kind of the calmest, most collective person in the room that I try to emulate even now. And you know, I think the example of him to really put my interests first, even though there were a lot of pressures on him to produce research at the time. Uh, it was a very, very selfless spirit that I saw demonstrated by Andrew Metrick.

And then in graduate school, my dissertation advisor, David Laibson, who I still work with, and, you know, I also wrote papers with Andrew Metrick for a period of time. You know, I’ve continued to work with David for, you know, decades now, and to see kind of the integrity and the kindness with which he conducts his life and his research has been a real model to me.

Todd Ream: Are there any authors who’ve had an outsized impact on your way of thinking, your sense of understanding of the vocation and the ideas that you find important?

James Choi: I think that my reading is diffuse enough that it’s hard to point to any single author. Obviously there are many, many great papers that I’ve read over the years, but I don’t think that I could point to particular authors. I mean, it’s not like in some fields or researchers or, or scholars will write big tomes and you kind of read this magnum opus and it’s this, you know, 500-page thing that no, I mean, we write 40, 50 page research articles. Each one is a contribution, but it’s, I think maybe unlikely that any single research article would change the way that you look at life or change the way that you approach your profession.

Todd Ream: Now, when we write them, we all feel that they are going to have that impact, of course, when they hit print or they get posted. But yes, I think if we’re reasonable, we know that, yeah. Incrementally as we move the needle in terms of thinking.

James Choi: Well, without a positive illusion nothing would end up happening.

Todd Ream: Right.

James Choi: So you just have to delude ourselves a little bit at the beginning of every project.

Todd Ream: Yep. Yep. Thank you.

I want to transition now to asking you a little bit more about your work at Yale and some of your teaching and the research that you’ve done. In addition to your work in corporate finance, you teach a course for MBA students on personal finance and a course for PhD students on household finance. At what point did you decide those courses may prove beneficial to the students that you serve?

James Choi: So, just to clarify, I’ve actually done, I think, no research in corporate finance, but I taught a corporate finance course for many years at Yale. And, you know, it was an easy course for me to teach. I taught it for many years. I’d, you know, good jokes at different sections of the course, I would tell year after year.

Todd Ream: Always important.

James Choi: Yeah. And they would go over well and I, you know, it, it was very easy and I could have done it for the rest of my career and I enjoyed teaching that course.

With that said my research is in household finance or personal finance. And once I got tenure, I remember this thing that Andrew Metrick told me, my mentor, he said, before you get tenure, teaching is something that you try to get out of the way so that you can produce the research that’s going to be necessary for you to get tenure. After tenure, teaching is a way to build your legacy. And so that stuck with me and I was thinking about what is it that I could teach that is something that I have a unique contribution for. You know, corporate finance is taught everywhere, and anybody with PhD in finance or economics could do reasonably well teaching that course. Very standardized.

But personal finance in the way that I thought I could teach it is something that first is not taught in many business schools. And then if it is taught and you know, you do see it taught at many undergraduate institutions, it’s taught in, I think what I would characterize as a rather unscientific way. There are lots of rules of thumb and things that, and if you take these courses and follow their advice, you’ll end up somewhere reasonable. It’s not bad advice, but it’s not really engaging with the science of personal financial management that has developed over the decades, which sometimes is at variance with the popular wisdom.

And so I thought this was an opportunity. I have tenure. I can devote some more energy to these extracurricular activities within the academy. And so I decided that I wanted to create this course. You know, another thing is, my research is in something called behavioral economics or behavioral finance. And, and this is research that’s focused on finding ways that people make mistakes or irrational.

And I think that a lot of the research there is a little more oriented towards ha ha ha, look at these stupid things that we all do. Um, isn’t that really amusing? And there is less of an orientation towards like, how can we fix this? And I thought that this course that I developed could be, you know, some contribution towards fixing some of those mistakes.

Todd Ream: Thank you. In what ways do you find those courses then fulfilling? And perhaps you just mentioned it in that you know you can correct mistakes before students may engage in them or advise others to engage in them.

James Choi: Yeah, so I think that there is a sense of service that I get from developing and teaching the course. And then I think there is what I’m trying to make, there’s an intellectual contribution that I’m trying to make. Again, the way personal finance is generally taught in the world is kind of a very basic financial literacy type of sequence.

And what I would like is for someday personal finance to be offered as a version, or at least a version of personal finance to be offered as an advanced economics elective where we kind of engage in the scientific evidence. We engage in the mathematical foundations, we engage in the statistical kind of processes that or the statistical inference that we engage in to get the findings that we have in, in the scientific literature. And so it’s still kind of an experimentation process that I’m in the middle of, where I’m trying to figure out how do we kind of bring the best of the science to people who are bright, literate but not trained PhD economists.

And frankly, a lot of PhD economists also don’t know this stuff. So many of my colleagues have told me, my gosh, I should take your course. And sometimes they’ll ask me, what should I do in, you know, my 403(b)? And I tell them, this is what you should do. They say, oh my gosh, like I’ve been doing it completely wrong. Um, and so there is a surprising lack of engagement within even academic economics training towards these very practical questions about which we do have a substantial scientific body of knowledge.

Todd Ream: I understand that your search for a textbook, per se, for your personal finance course proved to be curious. To begin, would you provide an overview of what the trade market offers in terms of books that you reviewed?

James Choi: So I think that you’re thinking about this paper that I wrote where I tried to read, or I did read the 50 most popular personal finance books out there at the moment. And to summarize the advice they give and then compare it to the prescriptions that come from economic theory. And, you know, you do find some areas of agreement and disagreement, but one thing that’s quite striking is just the way that certain themes, phrases, tropes appear over and over again across these books, across the decades.

So things like pay yourself first, you aren’t gonna spend money that you don’t see, so try to squirrel this money away in another bank account apart from your, your kind of main bank account. That’s just an example. So you do see things reappearing over and over again. So there are actually very few original thoughts in the personal finance space, at least in the trade book sector. It’s kind of repackaging of similar ideas over and over again accompanied by personal stories.

Todd Ream: Thank you. Running through those books, are there any common or competing perceptions of happiness and how people then inform the way they think about their finances?

James Choi: I think that the books generally there, there’s the implicit message that the more money you have the better your life will be. And I think that there is some warrant to that, that there, you know, are nice things that you can do for yourself and for your family and for your loved ones when you do have money. I think that a lot of the books do try to have a temporary message that money is not everything. But generally I think that there’s this theme that more money would be nice maybe very nice. It depends upon the author exactly how, how much emphasis they put on one pole versus the other.

The other thing that comes up is the notion that money allows you to purchase some level of freedom, which I think is interesting. And I think there’s truth to that, kind of the notion that if you have a bundle of savings, then you can walk away from a job situation that is not good, that you don’t like, that might be bad for you. Whereas if you are living paycheck to paycheck, then you don’t have that freedom to change your situation.

Todd Ream: Are there any common or competing perceptions in those books about what it means to be human too?

James Choi: Oh, that’s, that’s an interesting question. I don’t know if the books get that deep, honestly. 

Todd Ream: Do they work even with sort of an implicit perception that you know, to be human is to participate in the economic exercise with some latitude or freedom?

James Choi: Yeah, I mean, I think that there is the implicit assumption, probably explicit assumption that engaging in commercial activity, buying buying things for consumption is something that people would like to do, that you would like to do and you would like to do more of I don’t think that’s a very uncommon assumption, and it’s common enough that I don’t think that the books really engage with it in any kind of explicit way.

Todd Ream: Yeah. Thank you. Before we close and as our time becomes short now, I want to ask you about your understanding of the academic vocation and, and how you’ve learned to structure it over time.

As an economist, first to start, you know, in what ways have you come to understand it? What characteristics, qualities, and or practices prove fundamental to you and your understanding?

James Choi: Well, I think that the academic vocation is a noble one and I kind of come back to Proverbs 25:2, “It is the glory of God to conceal things, but it is the glory of kings to search them out.” And so there is inherent value in discovery. And to uncover these things that God has created, the truths that God has created, so I think that that is part of being made in the image of God. What does God do? God creates, and by creating, by co-creating, we engage in that bearing. So there’s that kind of aspect, the inherent value of creation, discovery.

And then I think that there’s an aspect of service, where we are equipping our students, our colleagues fellow scholars, to do something that hopefully is of value that promotes human flourishing. Maybe it feels more obvious in the kind of the very practical fields, whether it be management or engineering or medicine, that sort thing. I think even when it comes to the humanities and, and contemplating, you know, what it is, what is it about this piece of literature or this piece of art that makes it beautiful? How does it engage with our culture and our society? Uh, there is value in helping people. There’s service in helping people understand that. Appreciate that. And I think that if you don’t have that connection to a sense of purpose, to of service, then this becomes a relatively hard discipline to stay excited about for the long term.

Todd Ream: In what ways, if any, has the culture at the Yale School of Management proven instructive in terms of how your understanding of the academic vocation has emerged over the 20 years you’ve now spent there?

James Choi: Our motto is that we educate leaders for business and society. And I think that this is a motto that does imbue the true spirit of the school. And so I do see my faculty, my fellow faculty members thinking about how is it that we as a school can serve business and society to wrestle with those hard questions, to try to do things with a noble purpose. And so I think there is an ethos at the school that that does, does make working here more fun and pleasant.

And uh, also, you know, when I thought about making my personal finance course, that was one thing that I thought about, kind of how do we serve society and I tell my students at the beginning of the semester, actually, your personal situation in the future will be just fine. So I don’t actually care that much about your personal financial situation, even if you never took this class, you’ll be just fine.

But you know you’re going to be seen as kind of pillars of your community, hopefully. And people say, well, you have an MBA from Yale. This thing happened in the stock market. What should I do? What should I, how should I think about it? And I would like them to be able to provide an answer that is informed by something that is true. And, and, and on the frontier of knowledge rather than something that they just kind of made up, you know, they heard somewhere on the internet.

Todd Ream: Thank you. In what ways has the larger culture of the university then also proven instructive in terms of your understanding of the academic vocation?

James Choi: I don’t know if that the university as a whole is such a diffuse entity. So I think that that’s a harder question to answer. I do think that in the academic vocation in general though, what we have is kind of extended periods of, you know, no feedback on your work, and then many, many more instances of negative feedback on your work than positive feedback on your work. And so I think it is easy to burn out and get discouraged.

And I tell myself, and I tell students frequently, is that our call is actually not to be successful. Our call is to be faithful. And if I am faithful in the process and in the day-to-day living, then success, if it comes or it doesn’t come, that’s in God’s hands.

Todd Ream: Thank you. For economists broadly then what intellectual and/or moral virtues do you believe are important to cultivate?

James Choi: If you’re talking about economists as people, I think that humility is something we would do well to cultivate. And I think for economists we’re known as the imperial social science, because we kinda stick our nose in places where you might think the economists have no business sticking our noses in. And that’s because generally our approach is, oh, we have just the answer for you. What’s the question? There’s a notion that our toolbox, our intellectual framework is so powerful and so useful that we can kind of answer questions about, you know, many, many things.

And, you there, there, there is a reason why economists have become very, very influential. I do believe the toolbox is very useful, but there are things kind of outside of the economic framework that are important and which we can give short shrift to. So, for example, economists are very fixated on efficiency. And the reason that we became fixated on efficiency is some, it’s something that we can measure and something that we have good theoretical constructs for.

Even though, there’s always this caveat as we’re teaching these concepts of, of efficiency, that this is not the only thing that matters for people or for society. It’s just something that we can measure but the goes that what gets measured gets managed. And when this thing whether be GDP or any other of efficiency gets measured then, it becomes easy to think that that’s the only thing that matters.

Todd Ream: Thank you. For economists then, and perhaps it’s implied in some of what you just mentioned, what vices do you believe are most important to confront?

James Choi: Well, I mean, I think, again, the kind of lack of humility is the vice that you would want to avoid. And then I think the notion that you need to maximize everything and I think that there is virtue in saying that I’m gonna back off and actually sacrifice something even though that kind of lead to less product, less efficiency.

And so I think that, for example, the, the, the discipline of tithing some of your income, that’s letting go of a portion of, you know, a cumulative capacity to say that money is, you know, it’s a good thing in many respects, but it’s not the ultimate thing. And so to signify that it’s not ultimate thing, I’m going to give a bunch of it away.

And, you know, it’s not just kind of about money, but you know about time, relationships, that sort of thing where you can say look, this thing that I’m doing is in some sense, in some worldly sense, a, a a waste or now a productive use of time, but I’m going to do it anyway because this is a reflection of values and of something that’s important to cultivate.

Todd Ream: Yeah. For our final question then today I want to ask you, in what ways do you believe economists can be of greater service to the Church, and in what ways do you believe the Church can be of even greater service to economists?

James Choi: Well, economists do know some stuff that intersects with stuff the Church engages in. I think the most obvious area is in poverty relief. Uh, the Church has kinda long been engaged in helping the poor. And there are better ways to do that, there are worse ways to do that. There are ways that are effective, there are ways that are ineffective. And if there were kind of more engagement, I think between economists and the Church on these matters, and I think that the Church could end up doing more worldly good. There are other areas where I think that we have maybe less definitive, empirical evidence on.

But, you know, there’s a burgeoning field called the economics of religion where economists apply their tools to try to explain various kind of features of the religious landscape. And one finding or one theory that I think is quite interesting is a theory that tries to explain why the United States is so religious, whereas Europe is rather areligious at this point in time. And the theory goes that this is really about monopoly versus competition. So in many European countries there are state churches, so what you end up having is kind this state subsidized monopolist on the religious, religious sector. And that ends up in the long run, not serving the people very well because monopolies tend to get lazy and, and, extractive and, and just not service oriented.

Whereas in America, we have a cacophony of religious denominations and, and and religions, which, you know, obviously there, there are some downsides to that as well but I think the upside, other than the kind of the, the very important upside of just freedom of religion and conscience is that there is competition. And that means that if a certain denomination or, or religious approach or church group is not serving the people well, then people will vote with their feet. And again, there’s kind of dangers to people just going to hear what their itching ears want to hear. So I want to, you know, temper that statement.

But there could be some truth to this, that kind of state religion, state-sponsored religion is actually very bad for the religiosity of the population. And I think there’s something to that’s something to think about as we contemplate you know, in the culture wars, how much do we want to insert government on behalf of the Church, on behalf of Christian beliefs? I think that that theory could have something to say about that.

Now, I haven’t answered the second part of your question, which is how can the Church help economists? And I think that’s a very, very hard question. I do think that this, this is maybe not the necessarily the theme that you might have had in mind in terms of how the Church would serve economists, but economists love to run studies and to understand social phenomena. And the Church is engaged in all sorts of activities that are of interest to economists, poverty alleviation, character formation, cetera, et cetera.

And there are ways to do these things that make them amenable to study and for learning kind of generalizable lessons. And there are ways to do these things where you don’t know at the end of the day whether it did any good or not, what it did. And so kind of more partnership, I think with economists for some of these very ambitious programs that churches might be rolling out would, I think, in the long run, advance social science and advance the mission of the Church.

Todd Ream: Thank you. Thank you very much. Our guest has been James J. Choi, Professor of Finance at Yale University and a TIAA Institute Fellow. Thank you for taking the time to share your insights and wisdom with us.

James Choi: It was a pleasure. Thank you.

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Todd Ream: Thank you for joining us for Saturdays at seven Christian Scholars reviews conversation series with thought leaders about the academic vocation and the relationship that vocation shares with the Church. We invite you to join us again next week for Saturdays at Seven.

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