Academic Economics: Strengths and Faults After Considering I

**blast_investor** Mon Jul 02, 2007 10:30 pm

Academic Economics: Strengths and Faults After Considering I
Academic Economics: Strengths and Faults After Considering Interdisciplinary Needs

By Charles T. Munger October 3, 2003

TABLE OF CONTENTSPageIntroduction by Rajnish Mehra
1 Munger’s Opening Remarks:

1 Non-use of Efficient Market Theory at Berkshire.
2 Personal Multidisciplinary Education.
3 The Obvious Strengths of Academic Economics
4 What’s Wrong with Economics

5 1) Fatal Unconnectedness, Leading To “Man With A Hammer Syndrome,” Often Causing Overweighing What Can Be Counted
2) Failure To Follow The Fundamental Full Attribution Ethos of Hard Science
3) Physics Envy
7 Washington Post case study
7 Einstein and Sharon Stone.
7 4) Too Much Emphasis on Macroeconomics.
8 Case study: Nebraska Furniture Mart’s new store in Kansas City .
8 Case study: Les Schwab Tires .
9 Causes of problem-solving success ..
9 5) Too Little Synthesis in Economics.
10 6) Extreme and Counterproductive Psychological Ignorance.
13 7) Too Little Attention to Second and Higher Order Effects.
14 Mispredicting Medicare costs.
14 Investing in textile looms.
14 Workman’s comp madness.
15 Niederhoffering the curriculum .
15 8) Not Enough Attention to the Concept of Febezzlement.1
7 9) Not Enough Attention to Virtue and Vice Effects.
18Religion
18 Pay for directors and judges1
8 Not a vice that some systems are deliberately made unfair
19 -i- Contributions of vice to bubbles
19 Paradoxical good contributions from vice; the irremovability ofparadox.
19Conclusion
20 Clinging to failed ideas – a horror story
20 Repeating the big lesson
21 Q & A

Full text pdf file:
http://www.tilsonfunds.com/MungerUCSBspeech.pdf

**blast_investor** Mon Jul 02, 2007 10:36 pm

For those new in value investing world, and coming from B.S. M.S. or PhD background in economics of Universities, this is a wonderful article from Warren Buffett's colleague Charles Munger.

Charles Munger not only explained the difference between value investing and the current academic economics, but also criticized some of the non-sense application of economics in investing world.

In a simple word, in order to succeed in value investing and make big money out of it, you should forget about those economics learned in Universities.