"Fama-French" Model Renamed "Fama-Freedom" Model
Political Correctness Comes to Financial Economics
Mike Rosen
Issue date: 4/1/05 Section: GSB News
First it was the fries. Now, even modern portfolio theory has endured the wrath of legislators.
In a stunning victory for the forces of truth, justice and the American way, the Fama-French 3-factor model has been renamed the Fama-Freedom 3-factor model. The change is a follow up to the brilliantly orchestrated 2003 name change of "French Fries" to "Freedom Fries" in the House of Representatives cafeteria.
For those that have been less than academically rigorous in their time at Chicago, the 3-factor model says there are three types of risks that investors should get paid for. The risk associated with the broader market, the risk associated with coming home late with booze on your breath, and the risk associated by getting hit from a falling safe. One should not get paid for playing Risk. It's a board game, for Pete's sake!
This has nothing to do with grudges over wine theft in World War II. Nor does it have to do with a supposed lack of assistance in liberating a third world country from the forces of darkness. It also has nothing to do with the market efficiency model breaking down in a country where you only have to work seven hours a day, and can drink at lunch. It has to do with preserving a way of life, and following our esteemed leader (W.) in defeating all that is inappropriately celebrating the French. First was Freedom Fries. Now is the Fama-Freedom model. Next, the world!
Esteemed professor Eugene Fama was not available for comment. Perhaps this is because the subject of the article has nothing to do with financial research. About all we do know is that he is not up in Sweden sucking up to the good King. (Actually, the author of this article is behind on his class paper, and is afraid to email Fama until he shows some more progress).
Distinguished Financial Economics Professor John Cochrane was available for comment. "Consternation. Confabulation. It is a Violation and Misappropriation, an Administration of Degradation! If the model doesn't fit, one must resubmit!" We are not sure what he meant, but his passion on the subject is most encouraging.
Majestic Dean of the University of Chicago Graduate School of Business (that's chicagogsb.edu to some), Ned Steiner reminded us to remember the big picture. "What we are trying to do here is build the best business school in the world across all dimensions." Some suspect that there is a Mr. Freedom who couldn't afford to put his name on the building, so he bought half the rights to the model. Dean Steiner was unwilling to speak on this subject.
In a stunning victory for the forces of truth, justice and the American way, the Fama-French 3-factor model has been renamed the Fama-Freedom 3-factor model. The change is a follow up to the brilliantly orchestrated 2003 name change of "French Fries" to "Freedom Fries" in the House of Representatives cafeteria.
For those that have been less than academically rigorous in their time at Chicago, the 3-factor model says there are three types of risks that investors should get paid for. The risk associated with the broader market, the risk associated with coming home late with booze on your breath, and the risk associated by getting hit from a falling safe. One should not get paid for playing Risk. It's a board game, for Pete's sake!
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This has nothing to do with grudges over wine theft in World War II. Nor does it have to do with a supposed lack of assistance in liberating a third world country from the forces of darkness. It also has nothing to do with the market efficiency model breaking down in a country where you only have to work seven hours a day, and can drink at lunch. It has to do with preserving a way of life, and following our esteemed leader (W.) in defeating all that is inappropriately celebrating the French. First was Freedom Fries. Now is the Fama-Freedom model. Next, the world!
Esteemed professor Eugene Fama was not available for comment. Perhaps this is because the subject of the article has nothing to do with financial research. About all we do know is that he is not up in Sweden sucking up to the good King. (Actually, the author of this article is behind on his class paper, and is afraid to email Fama until he shows some more progress).
Distinguished Financial Economics Professor John Cochrane was available for comment. "Consternation. Confabulation. It is a Violation and Misappropriation, an Administration of Degradation! If the model doesn't fit, one must resubmit!" We are not sure what he meant, but his passion on the subject is most encouraging.
Majestic Dean of the University of Chicago Graduate School of Business (that's chicagogsb.edu to some), Ned Steiner reminded us to remember the big picture. "What we are trying to do here is build the best business school in the world across all dimensions." Some suspect that there is a Mr. Freedom who couldn't afford to put his name on the building, so he bought half the rights to the model. Dean Steiner was unwilling to speak on this subject.