Latest College Graduates Enter A More Optimistic Economy
MICHEL MARTIN, HOST:
As the class of 2017 prepares to enter the job market, there is some good news waiting for them. The unemployment rate is the lowest it's been since 2007, but these students have also come of age during a recession followed by a sluggish recovery. So we were wondering how all this could be affecting these freshly minted graduates and job seekers.
To talk about this, we called Mihir Desai. He's a professor at the Harvard Business School. He has a new book out called "The Wisdom Of Finance." But we called him because he published a piece this week in The Crimson, Harvard's student newspaper. In the spirit of full disclosure, that was my first journalism gig. Professor Mihir Desai, thank you so much for joining us.
MIHIR DESAI: Thanks so much. It's a pleasure.
MARTIN: So the last time the unemployment numbers were this low, these students were in third grade. Do you see an impact on this generation of having grown up in this timeframe?
DESAI: Yeah. I think part of what's happened is they don't allocate as much importance to economic outcomes that, perhaps, previous generations did. So they grew up in an era of reduced expectations in some ways. And as a consequence, they look for different ways to fill their life up which is not purely professional.
In some ways, that's quite helpful. On the other hand, it is a time in their life when they really should be dedicating themselves to building the human capital that will last them through the rest of their lives.
MARTIN: And let me get to the piece that caught our eye which is the piece that you posted in The Crimson, "The Trouble With Optionality" which is a way of saying - can you break it down in layman's terms for us - what? - hedging your bets?
DESAI: Yeah, exactly.
MARTIN: Keeping your options open?
DESAI: Yeah. So the number of young people I see who talk about maximizing optionality which is just a fancy way of saying I want to make sure and have as many options as possible, so I think that sounds like a great strategy. But what I've observed over the last several years is these people become obsessed with optionality, you know, with having options. And instead of doing what we think that we do, which is enable risk-taking, you know, which is what options are supposed to be able to do. Right? You don't acquire options just for their own use. You do it, so you can actually take on big risks. What I observed these people doing is just habitually acquiring options. They just get so used to the process of acquiring options that they never really execute on this larger vision of what they want.
So part of what I wanted to do in the piece is say, look, that's not the right way to think about this. In fact, when you do these things that acquire options, for example, working at prestigious firms - these are, again, for the elite graduates going to grad school - you know, your social network, yes that's wonderful. It allows you to have a lot of optionality. But don't forget that the really great things in life come from big, risky investments. And I think that's a really important piece of what people are missing out on. And in particular, you can get stuck. You can get stuck in a place where you think you're maximizing your options, and then you wake up. And you're, you know - you're still there 20 years later.
MARTIN: That was going to be my last question. It's commencement season, and everybody from Hillary Clinton to Will Ferrell is - as we just heard - are offering advice to recent graduates. So any other advice that I didn't have the wit to squeeze out of you to this point?
DESAI: Well, yeah. It is - it's always remarkable how in some ways consistent graduation advices, and, in some ways, that makes it anodyne, but that doesn't make it any less true, which is the pursuit of things that we truly love is the secret to professional happiness and blocking out the noise.
I guess that's one thing I would add which is there is so much noise out there, noise about what, you know, the unemployment rate is or noise about what you should be doing with your life or noise about what your friends are doing or what your parents want you to do. Just block it all out. Look inside yourself. Find out who you are and pursue that. So block out all the noise I think is an important piece of it as well.
MARTIN: That was Mihir Desai, professor at the Harvard Business School. His latest book is "The Wisdom Of Finance: Discovering Humanity In The World Of Risk And Return." And as we said that we also called him for his piece posted in The Crimson, "The Trouble With Optionality." Professor Desai, thank you so much for speaking with us.
DESAI: Thanks so much Michel.
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