Are Financial Economists Creative?

Since the emergence of the financial sector as a driving force of the US economy in the late 1970s, social scientists and the lay public have been increasingly paying attention to the discipline most linked to this process, to wit, financial economics.  To date, however, there is no systematic study of how financial economists arrive at a consensus over what constitutes exceptional work in their field. In this paper, I analyze data on two kinds of prestige-conferring processes. I use citation data drawn from the eight most prominent journals in financial economics to analyze the collaborative structures behind creative work in the field that gets wide recognition. More specifically, I focus on the characteristics of the social networks of the financial economists who win best paper awards in the top three journals (the Journal of Finance, the Journal of Financial Economics, and the Financial Analysts Journal), and, second, of the financial economists who win career awards (including the Financial Engineer of the Year Award, the Fischer Black Prize, the Fred Arditti Innovation Award, the Nicholas Molodovsky Award, the Deutsche Bank Prize, the Morgan Stanley AFA Award, and the Nobel prize). Drawing from the sociology of intellectual creativity, I hypothesize cohesion and diversity in social network profiles to lead to research more likely to be given recognition by the field.

I find that cohesive collaborations in the context of diverse research networks generate creative work that gets recognized in the field’s professional journals, but that life-time achievement awards responds to institutional dynamics only. I suggest that this paradox, deriving from the hybrid constituencies to which financial economics responds, may explain why financial economics seems unitary in spite of internal diversity.