Image: courtesy of Victoria Shi
When I first came to Oxford as a high school student six years ago, it looked a very different place from what it is now. Not that it has changed much since then (in fact, the city has not changed that much in 70 years), but it is interesting to notice how different the perception was at that time. A thing I remember the best from this first visit is, quite surprisingly, a typical postcard with a standard English joke. Not that it was original in any way, but it was one of the things to come to my mind as I was recollecting everything I learned during the nine months I spent here as an MFE student and pondering whether I still remember anything useful of it...
Nevertheless, even though a year at Oxford was a very short and intensive period, I would like to share some of my observations which I have not forgotten yet, and which might actually turn out to be true.
1. In the long run, skills and knowledge are often more important than education. Even with top grades from a top university, education itself can not possibly encompass all the things you may need in the 'real world', and it is not even supposed to. In fact, overloading the curriculum with every single piece of knowledge students may possibly need later on has never been a goal at Oxford. What may actually matter more is the ability to get these top grades, which implies being able to work hard to achieve a defined goal. During more than nine months spent here, I saw many people who achieved considerable success in finance without any education related to business. Not that they constitute a rule rather than an exception, but the fact to admit is that a degree is probably most useful for your first job, with all the subsequent ones received mostly due to experience, knowledge, weak ties, and some other factors.
Nevertheless, for the first job education is one of the most important ingredients of success, but perhaps for a very different reason. Obtaining a top degree, on a rule of thumb basis, may imply that an applicant is more likely to have the qualities discussed above than the one who does not (in economics, this is known as Spencian signalling, which is hopefully one more thing I have not forgotten yet).
2. In the long run, contributing a little to the final goal on a regular basis is often more efficient than contributing a lot in a short period of time. To put it more simple: it is definitely beneficial to be able to pull an all-nighter every second night, but in the 'real world', there are many things that can not be solved with all-nighters alone. And there are different reasons for this. One of the things to keep in mind is what behavioral finance proponents call 'overconfidence': the tendency to overestimate own ability to do a job in a timely manner is quite natural for most of us, which often leads to underestimation of the difficulty of a task and, yes, all-nighters and even worse.
In addition, there is one even more important implication. As one Economist reader cleverly noted, an ability to delay gratification and work on a regular basis without any external 'push factors' has much to do with self-discipline, which, as was discussed before, is an important factor of success.
3. While discussing some complex issues, it is important to keep in mind that for some questions, there are no 'right' answers, but only many wrong ones. Should central banks try to stabilise the economy? How to bring peace to the Middle East? What is to be done with the climate change? Despite the tremendous advance in economics, international relations, and environmental studies in recent years, there are still many issues which are difficult to resolve. Again, the reasons are numerous. Sometimes there is not enough information available to solve this kind of problem, sometimes there is no known way to solve them, and sometimes it is even difficult to define the problem itself. Many problems refer to strategic interaction with agents having mutually exclusive goals, so that the final solution will leave at least one party unhappy (nevertheless, it is worth mentioning that the "truth is always in the middle" argument is often a fallacy).
Referring to the stuff we actually covered in our classes at the business school, most problems in the real world resemble HBS cases, where you have insufficient information and need to make assumptions, rather than well-defined high-school problems with 'only one right answer'. Using educated assumptions, as it can be implied, may be just as much of an art as of a science.
4. In the end, what really matters is your final result, not the amount of work you have done. The key point here is that it is often unwise to appeal to your past effort trying to justify a failure. With a simple analogy, you either win a lottery or not, and if you don't, it doesn't matter ex post how close your number was to the winning one or how many tickets you have bought. It would be wrong, however, to say that hard work does not matter. It does matter a lot, but what matters even more is productivity. Referring to the stuff we are supposed to remember from our finance classes, it is often just as illogical to expect additional reward for unnecessary hard work per se as to expect additional reward for taking unnecessary idiosyncratic risks you can avoid.
However, it is also worth mentioning that it does not mean that a failure to achieve the goal means only losses. As one Greek poet noted, you gain a lot by pursuing your goal, sometimes even more than by reaching it.
5. No matter how dismal it may sound, there are in fact many occasions where there is no way to win. Referring to a well-known example outlined in one interesting book, it is quite possible for a strategic interaction to have only one winning strategy for one player and no winning strategies for another. As Sun Tzu argued thousands of years ago, it is always important to 'know your terrain' and to understand what surrounds you. In normal language, it refers to a well-known quote by Warren Buffet: “If you've been playing poker for half an hour and you still don't know who the patsy is, you're the patsy.”
6. Among different types of resources one can possess, information is one of the most important. Moreover, an ability to find and use this information, as well as to apply critical thinking are probably two of the most important takeaways from a university. At Oxford, students are trained to treat things they are being taught cum grano salis, and raising doubts is not only allowed, but encouraged. Even more, bashing the findings of a Nobel laureate is perfectly acceptable, as long as the argument raised is justified (CAPM is a common example).
As it turns out, it is often unwise to think that someone is definitely right just because he or she has two PhDs, the Nobel Prize in Economics, or 20 years of experience at Goldman Sachs. Smart people do make mistakes, and sometimes these mistakes have a devastating effect. The recent financial crisis, which was overlooked by many of the brightest minds on Earth, is a good example. As Joseph Stiglitz, a notable economist (and a Nobel laureate, by the way) has said, the most surprising thing about it was that it "came as a surprise to so many."
7. Education and training mean a lot, but nature is also important. As the evidence suggests, hard work can not always compensate for the lack of talent, which implies that ideally one should make the best use of own comparative advantage and do what he or she can do relatively better (which, of course, is often easier said than done). However, an interesting fact to notice is that many successful businesspeople do not seem to possess any extraordinary skills in finance or economics, but are very good at something else (self-discipline, soft skills, 'street intelligence' etc.). But this leads to another discussion on ability measurement and determinants of success, which probably deserves a separate blog post.
Nevertheless, many people may actually have aptitude (which is not exactly the same as talent) in many different spheres, often not quite related. And again, even with some natural talent, it is work that turns it into abilities and skills.
8. An additional benefit higher education may bring is a higher level of self-reflection and better introspection. Although it may sound pretty obvious, understanding own limits may be just as important as understanding own abilities. For someone eager to take as much from a university as possible, a sad thing to realise is that there is just too much here to learn, and a difficult decision to make is often what not to learn. In a way it refers to a well-known concept of opportunity cost, but it also implies that 'some doors have to be closed.'
9. Optimism is definitely beneficial, but clear understanding of an environment around and appropriate actions are even more important. Stress, anxiety, and despair are all necessary for personal and professional development, at some stages and limited amount, but what is even more important is an ability to act in a right way under pressure rather than ignore the problem and hope for a brighter future. In relation to our classes, we were shown many cases of severe financial distress resulting not only from managerial errors, but also from ignoring something fairly obvious and acting as if everything is perfectly fine. Quite often, optimism and positive attitude are just as good as the assumptions they are based on.
However, two more things are important to mention. Although 'doing something' is often better than 'doing nothing' in a difficult situation, decisions made under stress or emotional arousal are rarely well-calibrated. And it is also worth saying that sometimes a bit of excessive optimism is perfectly justified. Truth to be told, many of my classmates were very surprised to receive an offer from Oxford as they thought they failed an interview (my interview wasn't perfect either), and I believe even more talented prospective students have never applied because they were sure they 'would never make it to Oxford'.
10. Finally, an interesting point was raised by one successful Oxford alumnus in our Farewell Dinner few days ago. Although Oxford is a truly great university and MFE is a really good degree to have, people with very different education can be no worse. Even though we have some sense of 'entitlement' and high expectations, many other talented and intelligent people never make it here for reasons other than ability and motivation and can be even more likely to succeed. As Cecil Rhodes, another alumnus and a guy who established world's most prestigious scholarship (and, even more important, donated a big sum of money to my college at Oxford) has said, "Remember that you are an Englishman, and have consequently won first prize in the lottery of life." And well, winning a lottery means something too.
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