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Luigi Zingales

Can Wonks Save Finance From Itself?

Does finance benefit society? Academics need a better answer.
Two on one hardly seems fair.

Two on one hardly seems fair.

Photographer: Justin Sullivan/Getty Images

Does finance benefit society? It's a question that has become all too relevant in recent years, and one that academic economists need to do a much better job of answering.

Most economists assume that finance is an unmitigated good -- the more opportunities people have to diversify and insure against risks, the better off they are. The 2008 financial crisis and the long string of fraud and market-rigging scandals that followed, though, have given the public a different view: The latest wave of the Chicago Booth-Kellogg School Financial Trust Index shows that 48 percent of Americans think finance hurts the U.S. economy, with only 34 percent saying that it helps.