One of the greatest things about attending college is being taught by subject matter experts who bring unique expertise and insight to the classroom. I found this to be true while attending the University of Pennsylvania and given the impressive credentials of my professors, I typically did not question much of what they said.
However, as I took more courses, it became clear that while these professors may have a good grasp on past events in their area of study, many were extrapolating their understanding to the future, ignoring the clear hindsight bias that made much of their teaching accurate.
Having been out of school for several years, it is now very clear that many professors, especially those teaching at Ivy League Universities, were not very good at predicting the future. Below are three examples illustrating why critical thinking is imperative, even when you are learning from experts in a given field.
The Future Possibility of the Election of Donald Trump as President
In the Fall of 2013, I took a course called “Who Gets Elected and Why” taught by former Pennsylvania Governor Ed Rendell. The class was absolutely fascinating, and to be clear, I have nothing against Ed Rendell. That said, given the title of the course, and his vast political knowledge, the following example demonstrates why professors should not dismiss student ideas just because they do not align with their knowledge of the past.
We were having a discussion in class about third party candidates. Professor Rendell was explaining why a candidate outside the two party system could never be elected. One of the main reasons was that a third party candidate could never get enough earned media. Earned media is news and commentary about a candidate’s campaign on television, in newspapers and magazines, and on social media.
One of the students in the class asked whether it would be possible for a non establishment candidate to successfully run for president if they ran under one of the two major parties despite not having any experience or political connections.
Professor Rendell reiterated his point that a successful candidate would need enough money to effectively be able to self-finance their campaign and would need to be able to generate an impossible amount of earned media. The student asked, “what about someone who is rich and also can generate huge amounts of attention, positive or negative?” Professor Rendell chuckled and asked, “who might that be?” The student responded, “someone like Donald Trump. The whole class burst out laughing and Former Governor Ed Rendell returned to teaching us about “things in politics that were actually possible.”
The student was heckled throughout the rest of the semester. As it would later be clear, this student would be correct, and Donald Trump was elected President three years later, garnering an unprecedented $2 Billion in free earned media and knocking out party establishment candidates who vastly outspent him.
The Rise of Cryptocurrencies
In the Fall of 2012, I took “Intro to Macroeconomics” taught by Luca Bossi, a senior lecturer with a Ph.D. in Economics from Cornell University, and a self described “expert” in macroeconomics, public economics, and consumption theory.
I was fascinated by cryptocurrency, and asked him in class one day about the potential for Bitcoin, blockchain, and other cryptocurrencies to change global finance. He went on a 20 minute tirade mocking me, emphasizing that “anyone who believes Bitcoin will gain traction is an idiot” and that “Bitcoin is just a scam that will be worthless within a year.
It’s bad enough to make fun of a student, but in this case, his uninformed belief that cryptocurrencies had no value and that investors would never take notice, almost cost me one of the best investment opportunities that I will encounter in my life.
At the time he made these remarks Bitcoin was trading around $10.46. I sold the bulk of my bitcoin toward the peak about 5 years later at a price of roughly $17,621.
To be clear — I’m not suggesting I had any idea the price would rise this high and it was largely luck that I sold toward the current all time high. But if you had invested early, and sold at virtually any price beyond a year later, you would have made a huge profit.
Perhaps more importantly, getting involved with Bitcoin investing led me to found The Cryptocurrency Alliance, a Super PAC promoting cryptocurrencies and blockchain technology. If I had listened to his uninformed opinion, I never would have explored this fascinating new technology.
The Decline of Retail
In the Spring of 2013, I took a course called “Urban Real Estate Markets” taught by Howard Kozloff. The class was perhaps my favorite at Penn and I learned a lot about real estate development from Professor Kozloff.
As part of the class, we had a number of guest speakers. One of the speakers that stands out in my mind is David Lynn. Lynn spoke to our class about trends in real estate, focusing specifically on retail.
When asked by a number of the students about whether retail space could potentially be negatively impacted by e-commerce and online shopping (including Amazon), he repeatedly told our class we were “wrong” and that as a real estate investor at a major fund he had seen these worries before, but that online shopping would never cut into retail sales.
Part of his argument was that most people liked the experience of shopping and were to impatient to wait for products to be delivered to them online. He also insisted that Amazon was just an “over-hyped” company that could never gain any significant market share of retail sales and affect brick-and-mortar retail stores.
He actually was still peddling an extremely watered-down version of this argument as late as 2015.
When posed the following question by The National Real Estate Investor:
Isn’t physical retail a dinosaur destined for extinction because of the rapid growth of online shopping?
“Heavens, no! Reports of the death of physical retail have been greatly exaggerated…These retail formats are difficult if not impossible to provide online — have you ever tried eating a hamburger online? As Americans find themselves having to work longer hours to maintain their standard of living, these services found at the local retail center will become increasing important.”
Clearly this was not what happened, and while there are many efforts to re-purpose real estate formerly used for retail, Amazon has had a tremendous impact. Luckily in this case, few in the class seemed convinced of his argument as Amazon was already a part of our everyday lives but had this been a few years earlier, we very easily could have left class that day believing brick-and-mortar retail was actually underdeveloped and would experience massive growth.
Group think and the suppression of differing views by college professors in a position of authority is antithetical to the mission often espoused by universities to foster intellectual diversity and prepare their students to be successful in the real world.
Obviously some college professors are quite open to new ideas that contradict their own. But others are only experts in the past pertaining to their field and their prognostications should be taken with a grain of salt. Especially when they are at elite universities, professors teach and earn a living in a state of privileged seclusion and are often disconnected from the practicalities of the real world.