Opinion – Rodrigo Tavares: Financial market needs more professionals trained in humanities

“What are the possible impacts of climate change on the management of an investment portfolio?” This was one of the questions that 80 of my students recently had to answer on the final exam for the chair in sustainable finance.

79 students from all over the world, expert in financial calculation, discussed how climate risk could impact the calculation of the Beta Index. Others looked at history and mentioned the Stern report, a study commissioned by the British government on the effects of climate change on the global economy over the next 50 years. Some made projections of future scenarios. Several made a differentiation according to asset class. Most of the answers were a repast of wisdom.

But the student with the highest score was the only one who answered that climate change may, in some cases, not impact the management of financial assets. She used all the references she learned in the classroom to leave her fingerprints in a contrasting and densely argued vision. It gave up being a mere transmission channel and became a vehicle for issuing original information. She thought, didn’t memorize or calculate.

Students who are now finishing their studies at business schools will change jobs, and possibly careers, 7 or 8 times. They are the materialization of a globalized world in constant turmoil.

Instead of training students to memorize the truth, we have to inspire them to create it; as opposed to cultivating a single specialty, we have to fertilize its adaptability; to overcome their natural self-centeredness, we have to give them the opportunity to experience the anxieties of others.

STEM knowledge – Science, Technology, Engineering and Mathematics – continues to be fundamental, but the World Economic Forum highlights that among the 10 most valued skills in the future will also be the ability to critically analyze and solve problems; the ability to show initiative, innovation and creativity; and the ability to be flexible, tolerant and resilient.

The demonization of the Humanities, initiated with 20th century Fordism and sharpened over the last century by the apology for speed, by the peremptory and pointed responses and by the robotization of production, weakened our ability to offer multiple interpretations to make a complex problem intelligible. We value the aptitude for a ready answer, the one that blows science out of the mouth with breath, more than the virtuosity of a multiform answer.

The financial and corporate markets need more professionals trained in Humanities. But these are starting to run out. In the US, only 5.4% of undergraduate degrees and 3.4% of masters are dedicated to the Humanities, according to the OECD. Luxembourg, France, Germany, Denmark and Italy lead this ranking, with percentages that, even so, do not exceed 13%.

The humanization of the corporate and professional market may contain a moral element that is generally the target of ideological and even partisan vandalism. It is also through this lens that the financial market is presented as a mechanism for extracting value and not creating wealth.

But there is a utilitarian aspect here that needs to be considered. The passage of graduates in Humanities through the financial market, inhabiting it, may make it possible to improve corporate performance, even if interpreted in the most percentage way possible.

We can train students to calculate standard deviation formulas to determine the face value of an asset’s risk. But is it really possible to calculate the risk – credit, political, environmental, social, governance – of a company without jumping around the mathematical equation?

We can train professionals for Python or Java programming languages. But is it possible to create technology without understanding the psychology of its users or without exploring the ethical and cultural dimensions that will enable the enjoyment of this engineering?

New technologies such as Machine Learning and Artificial Intelligence raise fundamental questions about what it means to be human. And to answer these questions we need cognitive versatility, not one-sidedness.

Bipolarization between Science and the Humanities is not beneficial for either the Sciences or the Humanities. Many financial concepts sprang from the Humanities. The options market was proposed by Thales of Miletus, the father of Greek philosophy and a businessman. The logic of diversification appears in the Hebrew Talmud and in the biblical book of Ecclesiastes. Political philosopher John Rawls’ principle of equanimity was adapted to managing an investment portfolio by Dan Iancu of Stanford University.

In São Paulo, the 450 meters on foot that separate the Faculty of Philosophy, Letters and Human Sciences (FFLCH) from the Faculty of Economics, Administration and Accounting (FEA) are measured in kilometers by those who attend both faculties.

But in the US, Stanford University and MIT –historically known for their focus on engineering and economics– are currently positioned in the top two of the Times Higher Education World ranking of the best universities in the Humanities and Arts. The world has changed and universities have changed.

The hiring of experts in ethics, philosophy and anthropology at companies such as Apple, Meta or Alphabet also skyrocketed. At Google, the Oxygen and Aristotle projects, started in 2009 and 2012, aimed to mathematically analyze all available internal data to identify the qualities that led to better individual performance.

The answer: the best professionals are those who have the strongest critical, creative and empathetic sense. Internal studies have led to the hiring of Humanities graduates to grow as double exponential roles.

The world has changed and corporations have changed.

In honor of my son Gabriel, an Anthropology and Music student, about to start his university career on a face-to-face basis