MFE Education: Customer Oriented versus Traditional Education


Staff member
The NYT recently asked its panel of academics whether business schools should treat its students as paying customers. Given the similar business nature between these and MFE programs, QuantNetwork asks its panel of directors of several MFE programs to share their opinion.

Charles S. Tapiero is the Topfer Chair Distinguished Professor of Financial Engineering and Technology Management and Head of Department of Finance and Risk Engineering Dept, NYU-Poly. Charles S. Tapiero has just published Risk Finance and Asset Pricing: Value, Measurements, and Markets

The presumption that one may define student enrollees as “customers” rather than “traditional students” is misleading. Stephen Trachtenberg points out rightly that they are not “customers” nor are they “not customers”. Graduate Students in Business Schools, but more so in Financial Engineering, are motivated and goal oriented. In some cases, they are also experienced and mature. As such, their expectations and their wants are well defined. Our programs at NYU-POLY are therefore both “customer” and “not customer” oriented, providing a broad set of specialization, a large variety of courses and the freedom to choose a program within limited and educational constraints. In this sense, our MS in financial engineering provides the tools and the means for students to carve “their academic path.” To be customers’ oriented is meant in this sense to meet students’ expectations.

At the same time, educational programs, and in particular in financial engineering have both a responsibility towards the student and society. Theoretical concepts and theories applied mindlessly can have dire consequences for both the individual student and society at large. While teaching students to appreciate the underlying rationales and techniques that financial engineers use for financial modeling, optimization, and decision making is essential, it is not sufficient. Financial engineering education cannot provide only an education of “how to” but also the “why” and the “how”.

While there are no normative ways to proceed, we have a responsibility to teach “traditionally”, that is, that education is a means to greater ends. Financial engineers cannot be “the canary in the coal mine” and ought to recognize that there is an inherent social and ethical responsibility that need not contradict the pursuit of wealth and money. Unchecked greed, partly at cause to the last financial meltdown of 2008, has pointed out that the pursuit of unchecked wealth can have in extremis its own retributions. To meet “customers” wants to improve their financial lot only will lead to a dominance of financial marketers devoid of responsibility and to “financial polluters” oblivious to the consequences of what they sell or preach. Financial engineering is both a means and ends and therefore, “securities”, “preferences”, “uncertainty” and their “exchange” have both financial and social values to be accounted for.

There are many opportunities to profit by contributing to economic sustainability, to investments in needed infrastructures, to preventing “booms and busts”, to reducing social inequities, to pointing to market potential defaults and failures etc. These opportunities are neither depreciated nor contradicting the opportunities: to profit from the design of complex and marketable financial products that provide greater and needed financial liquidity; to seek arbitrage opportunities and better forecast financial market prices. In this sense, financial engineering educational programs seeking to bridge theory and practice need to be both “customers” and “traditionally” oriented. Such programs ought to be also value based, seeking to sustain a system that has done us well but may also be at risk as the recent financial meltdown has shown.