Investment Strategy, Inflation Spirals, and the Future of US Healthcare: Highlights from Management Conference 2024

Chicago Booth’s 71st annual Management Conference took place on May 3, 2024 at the Sheridan Grand Riverwalk and Gleacher Center in Chicago. The conference featured a lineup of influential business leaders and notable faculty and alumni who discussed topics ranging from inflation spirals, to AI, to the future of private capital markets. More than 640 attendees came together to learn, discuss, and debate some of the most pressing issues in business, in true Booth style.

Selected highlights of this year’s conference are below.

Keynote Conversation with Paul Singer and Anil Kashyap

“Our philosophy then is the same now: We try to never lose money no matter what,” Paul Singer, founder, president, co-chief executive officer, and co-chief investment officer of Elliott Investment Management, said at the beginning of his keynote conversation with Anil Kashyap, the Stevens Distinguished Service Professor of Economics and Finance.

“It’s kind of brazen to use the phrase ‘no matter what,’” Singer continued, “but in 47 years, we’ve had two losing years.”

The work of Elliott Investment Management was just one of the many topics Singer and Kashyap discussed during the kickoff luncheon. The two also delved into investment strategy and its relationship not only to markets but also to the nature of work and society.

Activist Investing and Government Regulation

Kashyap began by asking Singer to describe his philosophy on “activist investing,” whereby an investment firm such as Elliott buys a minority stake in a company and approaches the company’s leadership with a plan to improve their business results. Singer’s thorough response highlighted not only Elliott’s current approach to activist investing, but also the history of this type of engagement, tracing its roots back to the 1980s. Over decades, Singer’s firm has had remarkable success using this approach.

“More often than not, our engagement with a company results in some part of our plan being implemented by the company,” Singer said.

Kashyap then asked Singer about how his firm approaches government regulation and policy.

Singer affirmed that he is in favor of a well-regulated market, but asserted that firms like Elliott bear a responsibility to engage with government policy. Singer said his firm has sometimes opposed a new SEC policy, writing letters and filing briefs for litigation if they see a particular regulatory move as an overreach.

“We can’t just be investors and traders,” Singer said. “We have to be involved in helping shape regulation.”

Looking Forward

When asked by Kashyap which future investing opportunities he sees as most intriguing, Singer mentioned both activist investing and credit—specifically stressed credit, as COVID-era government assistance expires and no longer insulates the market from a distressed credit cycle.

Kashyap concluded the conversation by asking what advice Singer would give to current Booth students.

Singer emphasized the importance of people skills and well-roundedness, encouraging students to, “be worldly, understand history, philosophy, how things work in different cultures.”

“It’s not the technical skills that are at the core of success in management,” Singer continued. “It’s the human skills: tenacity, resilience, reliability, honesty, and the ability to admit mistakes.”

Value-Based Care Models in the US Health System

One solution to the myriad issues with the US healthcare system might lie in value-based care models, according to Dan Adelman, the Charles I. Clough, Jr. Professor of Operations Management.

At the beginning of his session, Adelman walked attendees through the biggest challenges facing the US healthcare system, from Americans’ relatively poor life expectancy to the plethora of hospitals struggling economically, and he explained how a value-based care system could help remedy some of these issues. In a value-based care model, Adelman explained, hospitals are compensated based on the quality of care they provide patients rather than the volume of procedures they perform. Financial incentives such as revenue adjusters, shared savings and losses, and capitation encourage healthcare providers to keep patients out of the hospital and communicate more closely with patients’ other providers.

“We’re transforming out of a system where it’s a fee for service rewarding volume, to a fee for value, where we’re rewarding better outcomes with lower costs,” Adelman said.

This system rewards providers for being proactive rather than reactive, explained Adelman, and can decrease expensive hospital visits that result from poor communication and unmonitored health issues.

A Motivation Crisis

Anyone who finds themselves struggling to stay motivated at work is not alone, according to Ayelet Fishbach, the Jeffrey Breakenridge Keller Professor of Behavioral Science and Marketing and IBM Corporation Faculty Scholar. 

Fishbach began her session by citing recent US data about worker motivation: only 31 percent of workers consider themselves “engaged,” with 52 percent “not engaged,” and 17 percent “actively not engaged.”

“These numbers are especially high among younger workers,” who don’t feel that they can trust their employers to provide the financial, social, and personal growth benefits they expect from their jobs, explained Fishbach. She also drew a distinction between “motivation” and “willpower”: Staying motivated isn’t about being strong—it’s about being smart and knowing about motivational strategies.

One solution to workers’ lack of motivation lies in goal setting, Fishbach said. Setting ambitious goals that are intrinsically motivating is the best way to keep employees motivated over time. Intrinsic goals are those goals that people are excited to pursue, and they are more effective in motivating workers than the goals people wish they had already completed. 

Social support also plays a role in keeping workers motivated, said Fishbach. Evidence has shown that working with others and in the presence of others boosts motivation, which may explain why some people find that it’s difficult to stay motivated while working from home.

Inflation Spirals, Good and Bad

Guido Lorenzoni, the Robert W. Fogel Distinguished Service Professor of Economics, presented four models that economists have historically used to explain inflation: the quantity theory of money, which posits that inflation occurs when there is too much money in circulation and too few goods; demand exceeding supply, described by the theory known as the Phillips curve; the expectations augmented Phillips curve; and fiscal dominance, which occurs when a country’s debt and deficit are high enough that raising interest rates no longer affects inflation (and actually can worsen it).

Lorenzoni cautioned attendees against overreacting to the current inflation spiral in the United States and assuming it will play out the same way it did in the 1970s, though; the post-COVID economy has caused economists to grapple with new and unexpected variables and outcomes.

“This is a story of asking the economy to do more than it can,” Lorenzoni said. He explained that the current inflation spiral is caused by the disparity between prices and wages: the post-COVID demand for goods and services caused prices to spike, and wages were not able to catch up initially. As price increases subside, however, and wages continue to climb, this gap between prices and wages may narrow.

Additional Conference Highlights

Other afternoon breakout sessions included:

Perspectives on Private Capital – Moderator: Steven Neil Kaplan, Neubauer Family Distinguished Service Professor of Entrepreneurship and Finance and Kessenich E.P. Faculty Director at the Polsky Center for Entrepreneurship and Innovation.
Panelists: Martin Nesbitt, ’89, Raymond Svider, ’89, Greg Purcell, ’94, and Blair Jacobson, ’99

The Behavior of High-Net-Worth Individuals in Financial Markets – Ralph S. J. Koijen, AQR Capital Management Distinguished Service Professor of Finance and Fama Faculty Fellow.

Should Corporations Behave Morally? – Luigi Zingales, Robert C. McCormack Distinguished Service Professor of Entrepreneurship and Finance

Breaking the Mold – Raghuram G. Rajan, Katherine Dusak Miller Distinguished Service Professor of Finance

AI for Good or Evil? A Decision-Making Perspective – Anna Costello, Jeffrey Breakenridge Keller Professor of Accounting and David G. Booth Faculty Fellow

The Future of Asset Management – Moderator: Lubos Pastor, Charles P. McQuaid Distinguished Service Professor of Finance and Robert King Steel Faculty Fellow.
Panelists: Stephanie Braming, ’99, John Liew, ’94, and Kunal Kapoor, ’04

Rethinking AI – Sanjog Misra, Charles H. Kellstadt Distinguished Service Professor of Marketing and Applied AI

A modified version of this story appeared in the Fall 2024 print issue of Chicago Booth Magazine as “Conference Quick Takes.”