In today's environment, every student of finance is always taught what I would call the "nuts and bolts" of finance in their traditional coursework. This is basically discounting of cash flows using standard techniques. The questions to ask are the amount and timing of cash flows and the appropriate discount rate. The techniques are well-established and widely used.
Behavioral finance is often taught later in the educational curriculum, if at all. The formulaic methods of traditional finance are already firmly established in students’ minds by the time behavioral finance is introduced. Therefore, users who are accustomed to concrete and formulaic methodologies, are more likely to view behavioral finance as one of those "squishy subjects" akin to Merlyn and his elixirs. This result is unfortunate.
I have always viewed accounting as looking in the rearview mirror and making sure that all transactions are handled uniformly and "bucketed" properly. Finance, on the other hand, is forward looking.
The forward orientation of finance requires much "estimating" of the future. With a large degree of estimating, the results are much less concrete and much more subject to variation. This variation caused by "looking in a crystal ball" is highly effected by human characteristics - essentially behavioral finance.
The characteristics of behavioral finance have been around for much longer than the techniques of traditional finance. Why? Much of behavioral finance is related to being human. For example, the behavioral finance subject herding has been around since we lived in caves.
So when estimating the future in finance, practitioners should be first aware of their own human tendencies before they estimate cash flows, estimate discount rates, and crank out formulas. As they say, garbage in, garbage out.
For these reasons, learning behavioral finance should proceed traditional finance coursework.
We can't ever totally extricate ourselves from our tendency to be human, but by understanding our deficiencies, we can improve our projections of the future.
Remember, because finance is projecting the future, it is as much a science as an art.
