Lubin School of Business Finance Professor PV Viswanath, PhD, has spent much of his academic career thinking about the relationship between financial institutions and larger social systems. As the COVID-19 pandemic has put some of the costs of the current relationship between financial institutions and our healthcare system in plain view, Viswanath is beginning to embark on a multi-disciplinary research study analyzing disparity in financial security and health outcomes.
In this interview, Viswanath discusses how he became interested in the larger interconnectedness of these systems, and where society might go from here.
How did you begin to think about the ways the financial system impacts other seemingly separate systems?
I’ve actually been thinking about how the financial system is connected with other parts of the social system for quite some time. It just seemed to me for a long time that the way we look at the economic system and financial system in this depersonalized, anesthetized way — that they don’t have much to do with anything else. But the fact is that all systems are interconnected.
I come from India. I grew up in a free country, but my parents grew up in a colonial environment, and I could see how the colonial environment affected them, how they reacted in various situations. I started reading a lot about colonialism, and I was shocked to find out how the British had organized industrial policy, the railway network, all sorts of things, simply to drain resources out of India.
Over time, as I began to open my eyes and look around, and travel to Cuba, East Africa, Tanzania — I noticed economists tend to have a lot of blindfolds — a popular economic terms is ceteris paribus, meaning all things being the same. But all things are not the same.
How did your work evolve from there — from realizing these particular blindfolds existed?
I then started looking at how the financial system affects people — particularly people at the lower end of the income scale. I got involved in something called micro-finance. I found that even though micro-finance is supposed to help people who don’t have access to financial assets, and in many ways microfinance had been perverted to extract resources away from them.
In the capitalist system, since the industrial revolution, there’s been a depersonalization of people. The first was production — instead of making the entire thing, they just make a part of it. Instead of exchanging things — chickens for milk, for example — now we have money. Money means you don’t need to have a connection with the person you’re getting things from. Then there’s investing — you save money and give it somebody else, and that person makes the investment. Now with corporations, you don’t have a strong connection with the entity you’re invested in, you just have a share. And on top of all that, is your financial intermediary. You don’t even buy stocks directly oftentimes — you put money in a mutual fund, in a bank, and they invest the money.
All of these steps have actually increased efficiency. I’m not saying we should go back. But we have to recognize that this kind of depersonalization has its costs. A small example, around 2018, the UK created a Ministry of Loneliness. The UK! I think there’s an insufficient appreciation of this depersonalization, particularly from those who have contributed to it.
Do you think COVID will change this “depersonalization” of the financial system, now that many of its costs and problem areas have been exposed?
I want to say yes and no. Clearly people are thinking a lot more about race and class. But I don’t think that people have thought enough about how the system affects particular subgroups of people.
Economists tend not to think as people as stupid and misguided. For example, if people were voting for Trump in 2016, there must’ve been a good reason even though it seemed like some of the policies were hurting the very people that for him. I think this is true — the same kind of policies that were affecting minorities were also affecting a lot of rural populations that tended to be white, in a very negative fashion. I’m thinking about how the global system affected manufacturing.
Secondly, after the 2008 financial crisis, people realized that the crises affected people more if they were from certain racial groups. Black Americans, for example, tended to be sold loans or mortgages with higher interest rates, fees, and not given access to investment opportunities that might’ve improved their situation. Financial literacy, opportunity is closely related historically with your financial security — and though even there were a lot of papers coming out about what was happening, nothing major happened.
So, I hope this time will be different, but it really depends on all of us. We need to make sure things don’t go on as before.
How do you plan on applying these ideas to a research study?
Right now, I’m trying to find what data sources are available. We’ve found some data sources from the city and government — I’d like to start with New York City — to see whether there’s a correlation between physical layout of ATMS, banks, community service banks, and COVID deaths. There’s been some evidence that the location of food supermarkets actually affects health, beyond actual access to better food.
I want to see if there’s a relationship between these kind of obvious access to financial resources and health outcomes — and if so, what mediates it? Does financial literacy matter? Does age matter? Does access to the internet matter? How does the social system matter — are people associated with a church, community group, etc. I also want to do some survey research.
I want to start with the data available and look and these questions. And then perhaps jointly, with CHP or the sociology or anthropology department, do some sort of survey research to better understand how precisely the financial system affects these larger systems and outcomes.