Introducing Fairness in Business and Investment

This is a version of my speech from the (very enjoyable) London launch event of my book, on October 29th 2026. A version, because as I spoke without notes so these aren’t the exact words that I actually said!

When I first worked in the City, I wasn’t actually working in the City. Before we moved to Portsoken Street, Hermes’ offices were just along from here, on the east side of Mansell Street, and the official bounds of the City ran straight down the middle of that street. It’s less stark now, but there are still streets in this area where you can see one one side of the street the steel, glass and concrete and the wealth of the City, and on this side the bricks and mortar and the poverty of Tower Hamlets, where we are now. I know of no better symbol of the unfairness of our world, and how it gets oddly fixed and ossified than that the arbitrary choices of the Romans in choosing the boundaries of their settlement 2000 years ago are still reflected in a divide between wealth and poverty today. And this place, and the organisation it hosts, Toynbee Hall, works with the poor of this poor borough, and they often use the language of fairness talk about themselves.

That’s why we’re here.

Why we are here, though, is of course this little book, Fairness in Business and Investment. We all feel unfairness viscerally, and it’s not just that we here are a self-selected bunch. Rather, fairness is core to the human condition, it’s been a foundation of our social success as a species, it has been shown to be hard-wired in our brains, and been demonstrated to be present in children of ages all the way down to 15 months. And the thesis of my book is that when we as business-people and investors fail to be fair, we are not just denying something core to our humanity, we are worse at business and investment. For being fair delivers better business and investment, and delivers more prosperity for the long-term.

The book is in 3 parts, introductory, then fairness in business and fairness in investment.

As part of the introduction, I look at how consistent fairness is across cultures around the world. The ultimatum game shows this. I give XX £20 that she must share as she chooses it with YY – and they will get to keep their chosen shares if YY accepts what she’s offered. Economists argue that XX should make a low offer, and YY accept any money that is offered, because it’s free money (at least for you!). But of course that’s not how it works. Almost everywhere in almost all conditions, the most frequent offer, the mode, is 50%; the mean is often a bit lower, but still usually in the low 40s%; and offers below around 20% or 25% are almost always rejected. Fairness is shown to be – almost – universal. There is a key exception to the fairness shown by the ultimatum game, which I’ll come back to later.

Also in the introductory section, I discuss fairness of process, including the crucial issue of the Rule of Law. And I discuss fairness of outcomes, including the question of meritocracy. We all so love fairness that we want to believe that we live in meritocracies, and we’re often willing to believe that those who are suffering somehow deserve their misfortune, even when we happen to know for sure that’s not really true, and even when we doubt the genuine existence of meritocracy. I was at an event a couple of weeks ago and someone asserted that ‘no one believes in meritocracy any more’, in the sense that no one believes that we do live in meritocracies any more. But sadly that’s not true. Exactly the wrong people believe in meritocracy: those who succeed tend to, they believe they merit their success, think it is based on their skill and hard work alone, and are willing to ignore advantages they had or the role of just plain luck. And if they fall into that myth of meritocracy trap, it turns them into the most awful people. They drive aggressively, cutting up other traffic. They cheat in tests. They literally steal sweets from children. Successful people really can be awful human beings in their personal lives; who knows how they might act in their working lives?

The core of the book is the section on fairness in business. Here I look at each of the main stakeholder relationships, as set out in s172 of the Companies Act – employees, customers, suppliers, communities and so on. For each of them I consider what fairness looks like in relation to that stakeholder, what the benefits of fairness are, and something about the current state of play (usually not as good as it could be). I use the s172 list because I think it’s a useful articulation, not because I want to be narrowly British in the analysis – in fact when I share that ‘enlightened shareholder value’ approach with directors as part of the training I do, directors from around the world recognise it as a clear articulation of their duties, what they think the job of boards is, and what they think companies are there to do. And I show that even in the supposedly narrowly shareholder-focused US, actually the law properly understood is much closer to that articulation of enlightened shareholder value.

Of the s172 stakeholders, there’s probably least evidence for fairness making a valuable difference in the case of the environment. I think that’s because that relationship isn’t mediated through humans, and so isn’t subject to the push and pull between people that is often the source of fairness. But even there I find evidence of the need to strike a fair balance. And I go all the way down the list of s172 stakeholders, including corporate governance and good business conduct, and fair dealing with shareholders. I cover dual class shares, and the accounting and reporting wonks among you will be particularly pleased to know that I cover true and fair, as well as fair, balanced and understandable and Fair Disclosure (Reg FD) in that section. It’s striking how central fairness is to the language we use when we talk about the corporate relationship with its investors.

But it’s odd that we use fairness rather less in our expectations of investors themselves. So, to move to the final section of the book, fairness in investment. This section is rather less evidence-based and rather more aspirational than the fairness in business section. And the reason for this is that there is simply much less experience of fairness operating in the investment world, on which such evidence might be founded. Someone here’s employer has just launched an advertising campaign based on their being the fair pension and investment provider. While normally I love to see fairness in marketing, seeing it being applied as a core differentiator in the investment world depresses me a little.

And it’s here also that the outlier in the ultimatum game comes in: when researchers merely briefly called it a ‘Wall Street game’ when introducing the rules, the outcomes were very different, with initial offers much less generous and much greater acceptance of lowball offers. We fundamentally believe and accept that Wall Street, that the investment world, is less fair than the real world.

And that’s ironic because the foundation of all investment is the concept of fiduciary duties, that we’re looking after other people’s money and therefore must care for their interests above all. People in investment proudly talk about themselves as fiduciaries, as they should. And here’s the thing: fiduciary duties arise from that branch of the legal system known as Equity, which as the name suggests seeks to deliver fair outcomes whatever a strict interpretation of the law might be. So it is odd that investment, which is based on fiduciary duty, and so founded in equity, is not actually expected to be fair.

Fairness proves a valuable way to illuminate other key challenges in the investment world too, including stewardship, systemic risk and short-termism. The final nugget I’ll share is on short-termism, which we measure in investment using discount rates – the amount by which future money is worth less than money in the present. With the scale of our long-term problems, we desperately need to be thinking more long-term and so have lower discount rates, valuing the future more. But there’s a finding that in conditions of inequality – which obviously we are currently in – people have higher discount rates, they discount the future more and focus more on the present. There’s some logic to it, as inequality increases the risk that we may not be around to enjoy the future, and we may not have the funds to enjoy it. But the researchers argue that it’s more a psychological outcome than a logical one, and given that they’ve shown other psychological effects on discount rates (not least that men become much more short-term while in the presence of an attractive woman) it’s hard to argue with them.

So not only does unfairness exacerbate many of our future problems, it also constrains our ability – or at least how we perceive our ability – to deal with them.

So, in short, fairness matters to us as humans, deeply, viscerally. We miss something fundamental if we close our minds to it in our business and investment lives. Businesses need strong stakeholder relationships, all of which are stronger if mediated through fairness. Investment ignores fairness at its peril, risking the strength of customer (fiduciary) relationships, bringing systemic risks and limiting the ability to address them, getting timeframes wrong and too short-term, not least because of excess discounting. Yet we are human, and we shouldn’t allow the Wall Street game to have different fundamental rules to the rest of our lives, or be fooled by success within what we hope are meritocracies but really aren’t.

Fairness matters, and we will succeed more in business and for our investment clients, if we believe that and act more vigorously on it.

I’m happy to confirm as ever that the Sense of Fairness blog, and indeed Fairness in Business and Investment, are purely personal endeavours.

Fairness in Business and Investment, Paul Lee. Routledge, 2026

Baring the necessities

I fight shy of defining fairness. There’s a broad range of options that fulfil fairness for human beings – and different individuals will reach different judgements as to whether a particular circumstance falls within that range. There’s somewhat more clarity about unfairness. That concept animates us all so viscerally that we can more readily agree that something is unfair, even though there is much human judgement in that too.

This human and emotional side of fairness and unfairness is exactly why it is more rewarding to explore than the definable and measurable concepts of equality and inequality.

Such is the strength of my sense that I shouldn’t seek to define fairness that throughout my forthcoming book I provide no easy answers. Instead, I talk about ways in which businesspeople and investors can develop their own approach to finding a fair landing ground. I believe that the push and pull between people is so key to finding what is fair in any particular circumstance that making assertions in the absence of its particular details is all but impossible. It’s not by chance that the legal approach of equity is entirely based on reaching a fair outcome, setting aside any detailed legal rules: equity – fairness – can’t be defined in advance, successive courts have found, but only decided by judges considering the facts of the individual case. The same is true of fairness outside the court context: it must be subject to judgement based on the particular circumstances.

So I found myself baulking a little at those sections of Will Snell’s highly accessible new book The Fair Necessities that assert “Fairness is definable”. Indeed, for Snell, the CEO of the wonderful Fairness Foundation, the definition of fairness is based on his eponymous ‘fair necessities’ (which he and the Fairness Foundation first launched on the world in 2021). They are, exactly as he sets them out in the book:

Fair essentials: Everyone should have their basic needs met, but we need to go further to enable people to play a constructive role in society.
Fair opportunities: Everyone should be able to thrive, without having to overcome unreasonable barriers to opportunity or earn a huge salary.
Fair rewards: Everyone’s hard work should be rewarded, in line with their contribution to our society as well as to our economy.
Fair exchange: Everyone should contribute to society by paying their fair share in tax, and in return should be supported by society when they need it.
Fair treatment: Everyone should be treated with equal respect and should be able to exercise equal influence on decisions made in their name.

These seem to me a good articulation of key pillars of fairness, and key elements of what fairness might look like if delivered in practice. But a definition? Maybe not so much.

So I personally welcome the book’s later comments that fairness inevitably means different things to different people, and particularly comments acknowledging that really the fair necessities offer a framework for understanding fairness, and operationalising it in society – rather than a definition as such. Certainly, it was as such a framework that Snell spoke about the fair necessities at the book launch I had the pleasure of attending last month.

And it is really in that operationalisation of fairness that Snell’s book comes into its own, in a powerful and valuable way. Even as someone who has chatted with Snell over a number of years and closely followed the Fairness Foundation’s thoughtful work, I found much that was new in the book’s later chapters, especially the last substantive one, ‘Dismantling the barriers to fairness’. In particular, Snell discusses how to win the social and political argument about the need for greater fairness, and particularly highlights the need for an engaging and emotional discussion of fairness, not a purely technocratic one. Only occasionally does he fall into the trap of implying that the fairness agenda is favoured by people of one specific political persuasion; elsewhere he rightly notes that the concept works across the political spectrum.

Only deploying such an engaging and emotional discussion of fairness will, in Snell’s words, change the political wind, and help society acknowledge the scale of the risk that our current unfairnesses represent. I suspect his quote from economist Angus Deaton (from his 2024 Rethinking my Economics comments) will stay with me for some time: “Efficiency is important, but we valorise it over other ends … When efficiency comes with upward redistribution – frequently though not inevitably – our recommendations have become little more than a license for plunder.”

I’ve niggled about a small aspect of the book (though the posited definition is the frame within which its title is first explained) but really I would, very simply, highly commend The Fair Necessities to all. It’s accessible and challenging, and like this blog it is based on the clear understanding that our world needs, and deserves, more fairness. Do read it, do enjoy, and do think about how we collectively can more effectively operationalise fairness.

Shortsighted failings lead to health unfairness

As a wearer of glasses since childhood, it comes as no surprise to me that human beings generally are shortsighted. I mean that not in the sense that we all need to wear glasses (though statistics on the way that our phone-obsessed indoor lives appear to be driving an epidemic of myopia mean that we may be headed that way), but in the sense that we avoid overloading our brains by only paying attention to what is near at hand.

We tend to ignore the distant, geographically, in terms of time, culturally, socially or emotionally, and we have to work hard if we want to lean against that natural tendency. We pay more attention to the near-at-hand, to people who look and sound like us and people who coincide with us geographically and timeously. This is a natural response: it is one of our common heuristics, methods of avoiding informational and other overloads. “human kind/Cannot bear very much reality,” as TS Eliot has it in his extraordinary Burnt Norton, one of his Four Quartets.

But that shortsighted, narrow-minded view means we miss much that matters. When we are facing global risks, parochialism is a dangerous mindset. Among other things, it seems increasingly that this human tendency continues to hamper our response to very real global health challenges.

Take mpox (the rebrand from monkey pox was perhaps an attempt to make it seem like less of a distant issue). There has been dramatically greater UK media coverage of a household of 4 mpox patients suffering from the more infectious and more potent Clade Ib version (a clade is an individual branch on the genetic family tree) of the virus, first revealed at the end of October, than there has of the almost 50,000 cases, and over 1000 deaths, in an outbreak in Africa, particularly in the Democratic Republic of Congo, over the last several months. A more still recent single case in Leeds alone has also gained greater coverage. The same is true in the US: a single case in California revealed in the late November has received notably more attention than the global situation.

The World Health Organisation declared mpox a public health emergency of international concern back in August, and reconfirmed that view at the end of November. Despite that, only a couple of days ago did WHO authorise the first vaccine for children against it – young children are particularly susceptible given it passes through close contact. Happily, in its farsighted wisdom Japan is funding 3 million doses of this new vaccine, developed by KM Biologics. As an aside, it’s worth recognising suggestions that the upsurge of mpox may be related to a health success: the eradication of smallpox has led to the vaccination programme against that disease ending, removing its suppressive effect on other poxes.

It’s as if we’ve learned nothing from the Covid pandemic: that in a global world there is no such thing as a localised virus outbreak, no such thing as a disease that will not travel. Even a virus that needs close contact like mpox will travel, though clearly much more slowly than airborne Covid and the like. And viruses adapt – just as bird flu has seemed to, leading to an infection of a Canadian teen who had no known contact with wild birds. It took that revelation for the Canadian government to invest significantly in bird flu research, something that it announced just the day after the teen’s infection was revealed. Outbreaks that may seem containable can rapidly become something more. Our response always seems to be a belated one, only when the danger is very near at hand.

Fairness argues that we should care about outbreaks of viruses that affect other communities in our shared world, but so does selfish good sense. We need not be so shortsighted.

I am happy to confirm as ever that the Sense of Fairness blog is a wholly personal endeavour.

I am once again grateful to the investment world’s Jiminy Cricket, Raj Thamotheram, for continuing to nudge me on matters of health and fairness.

Association between digital smart device use and myopia: a systematic review and meta-analysis, Joshua Foreman et al, Lancet Digital Health, Vol 3, Issue 12, December 2021

Burnt Norton, The Four Quartets, TS Eliot

UKHSA detects first case of Clade Ib mpox – now renamed Latest update on cases of Clade Ib mpox, UK health Security Agency, 30 October 2024 and subsequent updates

California confirms first Clade I mpox case, US Centers for Disease Control and Prevention, 16 November 2024

WHO Director-General declares mpox outbreak a public health emergency of international concern, World Health Organisation, 14 August 2024

Second meeting of the International Health Regulations (2005) Emergency Committee regarding the upsurge of mpox 2024, World Health Organisation, 28 November 2024

The eradication of small pox may have the set stage for the mpox outbreak, All things considered, NPR, 25 November 2024

Statement from the Public Health Agency of Canada: Update on Avian Influenza and Risk to Canadians, Public Health Agency of Canada, 13 November 2024

Government of Canada invests in research on avian influenza A(H5N1), Canadian Institutes of Health Research, 14 November 2024

Debilitating poverty

Being poor brings many disadvantages. A lack of money squeezes options and reduces opportunity. It hampers health and makes ambition harder. But the effects aren’t just direct and physical. They are psychological too. Researchers are beginning to uncover just how debilitating being poor is for effective thinking.

The answer to the question posed in the title Do Financial Concerns Make Workers Less Productive? was a resounding yes. Not only did poor workers whose money troubles were temporarily alleviated produce more, they also made fewer mistakes in production, despite operating more quickly. There is a clear business productivity benefit from this poverty alleviation; and in work that pays piece rates – where workers are paid for their useful output in numbers of products – this alleviation of worry also enabled them to earn more.

In a world of unfairness in which many are kept poor, these are significant findings. In a world seeking greater growth, where growth has been held back by stagnant productivity, they are still more important.

The increase in productivity shown was much greater than that brought about by an increase in the piece rate paid (which in a control experiment was done alongside a cut in base pay so that overall earnings were steady). There was a small increase in output following the piece rate increase, but it was less than a tenth of the change brought about by removing money worries – and there was no discernable increase in the quality of production, meaning this piece rate change delivered much less than a twentieth of the improvement in productivity that alleviating poverty did.

It’s worth noting that the researchers were able to discard alternative explanations of why these workers become more productive. In particular, they specifically discounted the possibility that improved nutrition of the poverty-relieved workers was the cause, because of the speed of the effect of the early payments and the lack of difference in nutritional intake in that short period. The effect is a psychological one: workers who don’t need to worry constantly about money are more productive.

This means that our economies are being held back by workers who are less productive than they could be, simply because they do worry about money on an ongoing basis. GDP growth is being artificially depressed and poverty alleviation could help it recover. This represents a business, investment and economic opportunity.

These findings are depressing. But it’s worse to find that growing up in poverty also has debilitating effects on children.

A recent study finds that poor students underperform their usual standard on maths tests that use real-world scenarios involving money, food or social interactions. It’s not a small effect, either: their performance is on average 18% lower than it is on questions overall – and, the researchers note, it would look even worse if they compared performance against just those questions that are more neutral.

These results were surprising to the researchers, who were expecting to see outperformance in these more practical questions, revealing hidden talent among poor students (they use the jargon low SES, socioeconomic status) that may be untapped by traditional education. That’s the reason why such questions have increasingly been used in modern testing: they are thought to be more accessible to all students. But the result of this study indicates that accessibility comes at the price of triggering distracting thoughts for poorer young people. As the chart shows, performance is worst with regard to questions that refer to money specifically.

Another recent study also found evidence of underperformance on money-linked questions by poor students. It puts this down to ‘attention capture’ as the researcher identified an effect not only on the specifically money-linked questions but also underperformance on more neutral questions asked subsequent to them. It seems as though the question reminds the students to worry about money, and they then can’t shake off the concerns.

These results amount to another example of apparent meritocracy in fact acting to limit the opportunity of those who start with less. As the Fictional Money, Real Costs paper states:

“Examinations are an efficient mechanism to benchmark and rank a population based on a specific set of skills. The notion that they are fair, however, has increasingly been questioned. A significant concern is that performance differences reflect inequities in the testing process itself, rather than differences in underlying skills, and thus may contribute to the intergenerational transmission of existing inequality.”

I am happy to confirm as ever that the Sense of Fairness blog is a purely personal endeavour

Do Financial Concerns Make Workers Less Productive?, Supreet Kaur, Sendhil Mullainathan, Suanna Oh, Frank Schilbach, National Bureau Of Economic Research Working Paper 28338, January 2021

Math items about real-world content lower test-scores of students from families with low socioeconomic status, Marjolein Muskens, Willem Frankenhuis, Lex Borghans, npj Science of Learning, vol 9, art 19 (2024)

Fictional Money, Real Costs: Impacts of Financial Salience on Disadvantaged Students, Claire Duquennois, American Economic Review 2022, 112(3): 798–826

Deaton’s economics: fair criticism?

It is remarkable that the International Monetary Fund, one of the bastions of our modern economic construct, should be so willing to test and challenge current economic thinking. But that is what it does in publishing a striking short blog by respected economist Angus Deaton. Deaton is best known for his remarkable work on the US epidemic of what he has dubbed deaths of despair and he also led a recently-completed eponymous review of inequality for the Institute of Fiscal Studies. Deaton offers what amounts to an apologia for modern economics, and suggests some routes that may be more productive for the future. Not only might they be more productive, I would suggest that they are also likely to be fairer.

In the blog, Deaton questions mainstream economics. He does so from a remarkably mainstream position. He won the Nobel Prize in 2015, and is a professor at Princeton. His criticism of the failings of current economics, and not least of current economic education, should therefore hit home.

The core of Deaton’s points are made in crisp discussions under a handful of bullet-point headings. These are: power, philosophy and ethics, efficiency, empirical methods and humility (doesn’t our entire world need a whole lot more of that last?). He comes most crisply to his point in the first of these: “Without an analysis of power, it is hard to understand inequality or much else in modern capitalism.” But the bullet points reflect a continuity of thought, not separate ideas. He complains at the loss of ethical thought from economics and its replacement by an emphasis on efficiency and a simplifying focus on the financial: “We often equate well-being with money or consumption, missing much of what matters to people.”

Under efficiency, he states:

“Many subscribe to Lionel Robbins’ definition of economics as the allocation of scarce resources among competing ends or to the stronger version that says that economists should focus on efficiency and leave equity to others, to politicians or administrators. But the others regularly fail to materialize, so that when efficiency comes with upward redistribution—frequently though not inevitably—our recommendations become little more than a license for plunder.”

I think that quote bears rereading.

Applying these five approaches as a new lens for approaching questions, Deaton reaches a range of fresh conclusions – or rather a reduced level of certainty – about a number of different issues. These include: unions, free trade, global poverty and immigration.

But though it is not among these bullet-points, or the issues about which Deaton now has less certainty, to my mind one of the most notable single words in the piece is ‘efficacy’. Deaton says: “today we [economists] are in some disarray. We did not collectively predict the financial crisis and, worse still, we may have contributed to it through an overenthusiastic belief in the efficacy of markets, especially financial markets whose structure and implications we understood less well than we thought.” Normally economists and investors talk about market efficiency, and certainly the financial crisis was in part due to overconfidence that markets are efficient, that they will find the right prices for things. The efficient market hypothesis – which many investors take as a certainty, even though it is merely an hypothesis, and even though there would be no ability of active investors to outperform if it were true (admittedly many are more lucky than genuinely generate outperformance, but nonetheless it is still possible to outperform a market). The crisis showed that market pricing can often be very wrong and the use of market prices as a foundation for valuations can be risky.

Deaton is clearly referencing the Efficient Market Hypothesis (and the use of ‘efficiency’ as one of his bullet-point headings makes more notable his decision not to use the term in his comment about the disarray of modern economics), but he is actually making a very different point. He is asking whether markets are always efficacious, whether they work and always add value to human society. And his clear view is that they are not always, and do not always. We should listen, particularly those of us who work in financial markets.

Deaton has never minced his words, but here he is remarkably cruel about his profession. He says he does not want to get into the question of corruption among his peers, though he notes that allegations “have become common in some debates”. But he does state, bluntly: “economists, who have prospered mightily over the past half century, might fairly be accused of having a vested interest in capitalism as it currently operates”. In a blog that clearly has real concerns about the operation of modern capitalism, that fair comment is one that should hang over the profession, challenging all to rethink with the confidence and honesty that Deaton has.