‘Return on Investment’: The Narrow, Short-Sighted Finance Concept That Has Taken Over Society

There’s more to life than can be measured in monetary returns.

Darley Shen / The Atlantic

What’s a good use of money?

For investors, that question comes down to a relatively straightforward calculation: Which of the available options has the greatest expected return on the investment?

But investors are far from the only people who are using the “return on investment” framework to weigh different options. “This has become a very, very powerful tool for decision making, not only in business, but in our culture as a whole,” said Moses Pava, an ethicist and a dean of the Sy Syms School of Business at Yeshiva University, at the Aspen Ideas Festival, co-hosted by the Aspen Institute and ​The Atlantic. In particular, Pava sees this kind of thinking dominating the world of education, both on the part of students in choosing schools and majors, and on the part of school in how they market themselves to potential enrollees. This, he says, will not end well for liberal arts schools.

Undergraduate business schools have a pretty strong case to make for their value—if by value people mean an average starting salary right after graduation. Now, Pava says, a lot of liberal arts schools are trying to make that same case, saying they too provide a high return on investment. “But the bad news for the liberal arts people,” Pava argued, “is that once they’ve entered that conversation with [business schools] and started comparing themselves to us, they’ve lost the game, because they’re using our metaphor and they’re using our way of framing the question and they’ve kind of lost their soul.”

The fundamental problem with return-on-investment thinking is that it reduces the value of an experience to some sort of quantifiable, short-term outcome. Pava says he sees this in “assessments of learning,” which seek to measure what information students are absorbing. But such assessments miss some of the most profound learning, the kind that takes years to sink in. “The reality is,” Pava said, “the most important thing I ever learned—I went to Brandeis—I remember vividly sitting on the grass studying Martin Buber’s I and Thou. I had no idea what I was reading! But the seed was planted, and I’ve gone back to it every five years, and it’s become one of the ways that I look at the world.”

Pava believes that a “rational” model has a place: “If you’re buying potatoes for tonight’s dinner,” he said, “the rational model is fine.” But for the bigger things in life, “it’s really crazy. I ask my students, when you’re thinking about a spouse, do you make decisions in rational terms? Because if so, your marriage probably isn’t going to last very long.”

After all, he said, “Most of the best things in life cannot be measured, can’t even really be compared.”