When Finance Is a Character in a Novel

Desai also uncovers finance theory in Victorian romances. In Anthony Trollope’s “Phineas Finn,” Violet Effingham thinks about option value as she maintains a diversified portfolio of suitors. Lizzy Bennett, Jane Austen’s heroine of “Pride and Prejudice,” faces a classic “optimal stopping problem,” in which she risks ending up alone after turning down her first suitor. (Spoiler alert: Bennett’s bet pays off – she ends up with the delightful Mr. Darcy.)

While I’ve focused on literary examples, Desai’s exposition runs the cultural gamut. Jeff Koons manifests leverage in his art by financing and promising to create pieces before he knows how to construct them. Bialystock and Bloom’s antic scam in “The Producers” reminds us how important it is to have investor oversight.

At the end, Desai gives us a finance heroine to admire: Alexandra Bergson of Willa Cather’s “O Pioneers!,” who takes calculated risks in land investment for the benefit of her loved ones – and even in success thinks of herself as only a steward of capital.

So where does this journey lead? First, it gives a vibrant rediscovery of finance a human face. That alone is valuable, especially for those disheartened by the financial crisis, rising inequality and finance bros. But Desai’s “Wisdom” does more; it reminds us what’s meaningful in finance, both in terms of theory and in terms of the people that theory supports.

If finance were better attuned to its human impact, we might see fewer Martin Shkrelis and more Alexandra Bergsons. At a more macro scale, we might see more research, business and policy that recognizes the consequences of modern finance’s faults. There’s a lesson for the rest of economics here, too: As we bring economics to bear on human problems like intergenerational mobility, immigration and housing, it might pay to be well-read.

— Read LTCI Watch: Amour (with spoilers!) on ThinkAdvisor.