Daniel Gross is at Davos and writes:
I noticed a piece of gray paper on the floor. It looked like it might
be currency of some sort–certainly not a dollar, but perhaps Swiss
francs or something else. I started to bend over to pick it up, but
then I caught myself. This is the World Economic Forum. It is populated
by hundreds of economists and by thousands of business people schooled
in the tenets of economics. This is possibly the most rational,
profit-maximizing concentration of human capital in the world. These
are the actors who make up an efficient market. And of course adherents
to the efficient market hypothesis famously don't believe in the
concept of found money….
But I'm a
connoisseur of economic irrationality. And so I bent down and picked up
the paper. On one side, the grim visage of Queen Elizabeth. On the
other, Charles Darwin. It was a 10 pound note, worth about $16.25. Just
lying on the floor, unmolested by Nobel Prize-winning economists, CEOs
of Fortune 500 companies, and financial journalists.
Gross concludes the efficient markets hypothesis must be false.
The same thing happened to me once except I wasn't at Davos, I was walking in New York near Wall Street and I saw a green folded up note that looked to be money. I too paused and thought of the old joke that if it was money someone would have picked it up already, but I picked it up anyway and took a closer look…..alas, it was a cleverly folded piece of paper designed to look like money when dropped on the sidewalk, although it was actually an advertisement. Kudos to Eugene Fama, I thought on that day.
Perhaps our different experiences account for some of our differing economics views.
Hat tip to Ezra Klein.