I’m going to start with a confession: I stole the title of this blog from the book by Duncan J. Watts of the same title. Watts argues that common sense, while great for navigating daily life, is actually a poor tool for understanding complex social systems. We only think it works because of hindsight bias: once we know an outcome, we retroactively construct a story that makes it seem obvious, even though it was never actually predictable. His central thesis is that rather tha

About a third of the small firms in our study have three months of expenses in the bank. About one in ten could last only a week. Most have access to credit, and when they ask for more, they usually get it. Yet two-thirds say they'll rely mainly on savings, not credit, to fund their next investment. Why? And why can the same set of bookkeeping records lead one lender to offer a loan and another to turn it down? Earlier this month, the Financial Access Initiative presented pre

A few weekends ago, while waiting at a crosswalk in New York City, I overheard a conversation between what appeared to be two small business owners. The part I caught was something we hear all too often from small business owners in the U.S.: the long hours they devote to their businesses each week, weekends included, and their shared desire to “just have a break.” Part of what fills those hours is the range of roles an owner personally covers: operator, strategist, bookkee

A review of the final Dodd-Frank rule The promise of better data and greater accountability The small business lending market is extremely opaque. For example, decades of surveys and research has shown that minority-owned firms are approved for bank loans at significantly lower rates than their white-owned counterparts, are more likely to be discouraged from applying, and receive smaller loan amounts when they do obtain credit. America has never had a federal regulatory requ