“I don’t see things like anybody else,” says Jonathan Berk, the A.P. Giannini Professor of Finance at Stanford Graduate School of Business. “And so I can see things people don’t see.”
For example: In a recent paper, “Why Care About Debt-to-GDP?”, Berk argues that there is no solid economic justification for focusing on the debt-to-GDP ratio — a figure that causes consternation among policymakers, economists, and the financial press.
Essentially, Berk and coauthor Jules van Binsbergen are asking whether this handwringing is justified. “You can’t start making a fuss about a ratio with no real theoretical basis for that ratio,” he says on a new episode of the If/Then podcast.
In his research, Berk has also explored whether regulation is in consumers’ best interest. “When there’s money on the line, I think most people actually are quite capable of making good decisions,” he says. You may disagree, but: “That’s not enough: You have to show me that government can do better.”
Although questioning the status quo can make life more difficult, Berk says it “confers an enormous advantage.” He believes that organizations that harness the power of unconventional thinking gain a competitive edge.
“It’s allowed me to solve problems that other people couldn’t solve,” he says.
