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Dr. Hersh Shefrin

Dr. Hersh Shefrin [BSc(Hons)/70].

Dr. Hersh Shefrin: 2019 Distinguished Alumni Award Recipient for Lifetime Achievement

March 11, 2019 — 

The recipients of the 2019 University of Manitoba Distinguished Alumni Awards are graduates who are outstanding in their professional and personal lives. These honourees encompass a wide range of achievement, innovation and community service and inspire fellow alumni, current students and the community.

Dr. Hersh Shefrin [BSc(Hons)/70] has built his career on behavioural finance—the understanding that people can be unpredictable, rash and foolish and these human conditions can, and have had, disastrous consequences for financial markets. Over the past four decades, Dr. Shefrin has been a pioneer in this area with research into self-control issues, ethics and risk management and succeeds where many scholars don’t: effortlessly translating this complex data into practical advice for academics, professionals and the public. Dr. Shefrin is also a regular contributor to Forbes, and has been published in The New York Times and Wall Street Journal

Dr. Shefrin had a chance to to tell us about his time at the U of M, how financial issues have changed over the years, and some of his other thoughts, memories, and musings.


As a kid, I was pretty dreamy and full of wonder. When I was 12, I connected an antenna to a short wave radio that had been sitting around our house, and still remember the sense of excitement when I suddenly heard Big Ben chime on the BBC, Soviet propaganda on Radio Moscow, and ham radio operators chatting with each other across the globe. Listening to short wave awakened two interests in me. The first involved the cultural landscape of the world. The second involved the science that made it possible to send short wave signals over long distances, so much so that, growing up, physics was my favorite subject.

If I had a chance to advise my younger self, from the vantage point of today, I would probably suggest being a bit more disciplined. Here’s an example. I remember playing tennis at the Sargent Park courts. Because I had a good forehand, I never took the time, meaning I didn’t exercise the discipline, to develop a really good backhand. As a kid, that was how I functioned: playing to my strengths but not spending enough time shoring up my weaknesses. Later in life, I learned the importance of being better balanced.

One of my uncles was a well-known agricultural economist and he encouraged me to take economics as an elective when I entered the U of M. I don’t think he ever thought I’d adopt economics as a career, because I always talked about becoming a physicist. He just thought that a course in economics would provide me with a better understanding of how the world works.

At the U of M, I did start out in physics but switched to economics and mathematics after second year. It was at that time my focus shifted to using mathematics to understand how economic forces operate on the world.

One of the most important aspects of my time at the U of M occurred when I made the transition from physics to economics and math. Economics is a quantitative discipline, and because of my interest in both mathematics and economics, the economics faculty took a special interest in me. I think they saw potential, and said: “Let’s try to guide him so that he winds up in the right graduate school, and works with the right people.” And they did.

Later in my career, I would add psychology to the economics-mathematics mix. The impetus for adding psychology arose during my graduate student days when I began to ask myself: do the models that I’m building and studying actually reflect the way the world works? In seeking to answer that question, I just observed a huge disparity between the modelling assumptions that economists routinely used and the nature of the world around me. I knew something important was missing.

Behavioural economists study how psychology impacts economic decisions. In the mid-70s, I didn’t know anyone besides Dick Thaler and myself who called themselves behavioural economists. Dick and I were each other’s first behavioural collaborators. In fact, working on behavioural topics was quite risky, because at the time the economics profession was very ideological and the behavioural perspective was a challenge to the conventional ideology which assumed that people are perfectly rational decision makers. The challenge was in our saying that we needed to appreciate that when people make decisions, conflicts within their brains prevent them from behaving perfectly rationally. That perspective constituted a neurological leap.

To build a model that was neurological in nature was such a different undertaking from the standard approach. The key innovation was in developing an economic framework in which our emotions and thoughts may not be in alignment; and that misalignment can explain important aspects of how we behave when it comes to money, such as not saving enough and then making unwise investments. Money does make the world go around. Money can serve as a guide to making the world a better place: Adam Smith taught us that. But money can also be the root of evil. It’s important to understand both sides of the coin.

Personally, I don’t measure success in terms of money alone, even though I’m an economist. I see money as a means to an end, and by end I mean a set of bigger goals. Still, the process of making money is quite fascinating, and some people have a natural gift for it. I doubt I would have been a great businessperson, but I do enjoy being an academic studying how business decisions get made.

Early morning is a very creative time for me. I’ll brew some fresh coffee and just let my mind drift across ideas that I’ve been pondering. Making connections and tying things together is usually how my day starts.

I don’t obsess much about legacy, because legacy really depends on how a person’s contributions help the generations that follow. Certainly, though, I’ve had great fun working to chart completely new directions in economics, using mathematics to bring rigour to that enterprise, and describing how incredibly powerful concepts impact important decisions made by most people.

I’ve been fortunate to be in the right place at the right time. With that gift comes a certain responsibility to try and make a positive difference in people’s lives. I’m always cognizant of that, whether it’s helping a student find a job, helping a colleague publish a paper, helping a financial firm design a set of features to assist people with their borrowing and spending, or help a central bank design more effective regulations.

For me, success is doing things in the small and in the large that make the world a better place.


The University of Manitoba will recognize the 2019 Distinguished Alumni Award recipients for their outstanding achievements and contributions at the Celebration of Excellence gala on Wednesday, May 8, 2019.

Tickets are $85 and can be purchased online or by calling Alumni Relations at 204-474-9946, or toll free in Canada, 1-800-668-4908.

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