One day, I was talking with a young surgeon whose academic specialties included evaluating hospital performance. He thinks very deeply about what factors increase or decrease a hospital’s effectiveness, and we were discussing how successful hospitals function. In the middle of our conversation, he paused and then surprised me with a question: “Why do people in finance so often end up as heads of organizations?”

This question caught me off guard, and I improvised some answers. I told him economics is a potent discipline, and people who master it have precise analytic tools. As they move up in their organizations, they learn to rigorously evaluate the allocation of resources in the system. By the time they reach the ...

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