Ann Marie Hibbert, associate professor and finance Ph.D. program coordinator, looks at the world of finance through a different lens — one tinted by psychology as much as math.
Her research into behavioral finance is all about relaxing the assumption that financial agents always act rationally and that they are, in fact, influenced by things like behavioral biases and cognitive biases.
And in a world of pandemic fear buying and YouTube channels on managing your own stock portfolio, the insights of her research are becoming ever more valuable. We sat down with her to discuss just what it means to study behavioral finance and how she brings a unique perspective — as a Black faculty member and an immigrant who has worked hard both “in the trenches” and in academia — to the classroom.
So, how is the study of behavioral finance different than traditional ways of looking at it?
Classical finance theories assume that financial agents are completely rational. Behavioral finance tends to relax some of those assumptions. A lot of the theories that are used in this subfield of finance borrow from psychology, particularly in decision-making. We look at, for example, what investors do that deviates from what rationality would dictate.
Can you give me an example of what your research looks like?
A piece we are working on right now, me and my team of researchers, is looking at social media information and how it affects analysts’ behaviors. Analysts are supposed to focus on real, solid information, but in this piece, we are showing how they are not immune to, for example, social media influences.
What kinds of trends are you seeing in the world that behavioral finance can help us understand?
So, with more interest in the market, what I think is going to happen is that a lot of people are going to want to take a more active role. I think we're going to see more people trading. And I've seen this with my students. Once we teach them about trading, everybody wants to open an account on apps like Robinhood. But we know that can unravel very easily. My fear is, as people start to take over their small investments, their liquid assets, they’ll start to think they should take control of their long-term savings. Will this be necessarily a good thing for the market? I'm not sure.
Can you tell me about your experience as a Black faculty member?
I'm from Jamaica. So, it's only when I moved to the states that I became a minority. When I started here 13 years ago, I was the only Black faculty [at the Chambers College]. Since then, they've hired two more at different points in time who have left. And so, I feel like a unicorn. I second guess myself sometimes. You don’t know if you’re being perceived in a certain way. I sometimes have to try harder to not come across as highlighting my unique situation. That can be draining. But it's not a new experience to some here. I had an African American student come up to me in my fourth or fifth year. He said I would not believe what it meant to him the first day he walked into intermediate finance and saw he was having a Black teacher or professor for the first time in his life. People were always telling him what he can achieve and what he can do. But these were people who never looked like him. And to actually see somebody look like him in front of a classroom, I couldn’t understand what that meant to him at the time. That experience changed a lot of things for me. I have since become a lifelong mentor for him. We're still extremely good friends.
You grew up in Jamaica, earned a degree in electrical and computer engineering and an MBA before your Ph.D. You’ve worked as a teacher, in the hotel industry, in finance. How do you bring that into the classroom?
When I'm talking to my students about receivables, I'm not talking about a concept, I'm talking about having done collection of receivables. I'm not telling them about just a line item on a balance sheet. I'm telling them about having done it in the trenches. I spend a lot of time preparing for my class. The world is changing every semester, so I talk a lot to my former students. I ask them what is really relevant. I don't want to just teach my students some theory from 1970. I want them to know, yes this is what the theory says, but how will you apply it on the job the first day? When they realize the applicability of what I teach them for their real-life work, that's when they appreciate it. I see my students as people I want to be able to maintain a relationship with long beyond the classroom.