Is (teaching) Economics doing more harm than good?

Every September thousands of students enter into universities and institutes of higher education. A large number of these take some economics courses. Some 23% of all undergraduates are enrolled in social science/business/Law courses, where at least some introductory economics is very common. Economists also typically teach courses such as statistics, or introductory mathematics for social scientists. And yet, we have no idea whether or not this does any good. Much worse, we have no idea whether or not this does harm. Maybe we should find out?

Social sciences are different to the natural sciences. It is much more difficult and social sciences to obtain a definitive answer to a research question. For almost every question posed there will be opposing answers. Social science is messy. Social Science progresses slowly That said there is a significant body of evidence that suggests that we might want to be careful about exposing students to too much economics. We should be careful in interpretation of social science results. Economics is often stated to have physics envy, a hankering after the cleanliness and order of (classical, Newtonian) physics. All too often this desire for order manifests itself as meaningless statistical precision. As I constantly tell my students, it is much better to be approximately right than precisely wrong.  So, lets keep that in mind.

Economists are different. We have known for decades, from the pioneering work of Marwell and Ames¹ that economists tend to be free riders and to have little notion of fairness. Allgood noted ² recently that business majors views on volunteering, altruism etc tend to be closer to those of the general population then were those of economics majors. Kirchgässner ³ noted the propensity of people to vote against the recommendations of economists, suggesting that in effect the normative views of economists were simply different from those of the rest of society. Comparing ⁴ the views of ordinary citizens with economists, US researchers found very significant differences. Economists on the whole, seem to be remote in their views from those of the ordinary person, and are consequently greatly ignored by them. Politicians and policymakers however, they do not ignore the input of professional economists, although the views of economists are filters through of course political and pragmatic lenses ⁵. Thus a growing disconnect may well occur. Like it or not economics, and in particular ‘political economy’ involves economic experts making value judgements. Baujard ⁶ examines this issue, the tension between what claims to be a positive and is in fact a normative undertaking, and concludes that the very methodologies of economics are such as to force value judgements. This is echoed in Lepenies ⁷ examination of trade theory books, a wonderful example of the benefits of textual, hermanuetical analysis of the sort all too rarely seen in economics.  Gandal ⁸ suggests that compared to others economics students place greater value on power and achievement, that this strengthens with economic training and that this is persistent. My own research ⁹ suggests that Irish economists exhibited a significant degree of cognitive dissonance, advocating in public and professional environments issues with which they were personally uncomfortable. Wang ¹⁰ in recent research, noted that MBA students who had taken more economics courses tended to be greedier, and to believe in greed, than those who had not. They conclude “economics education may have serious, albeit unintended consequences on our students’ attitudes toward greed”.

Extremely well cited research by Frank ¹¹ noted that economic professors tended to be at the very lowest end for professions in terms of charitable giving. In subsequent research ¹² he noted that greater economic training tended to inhibit social cooperation. This research is not without controversy, with people such as Yezer suggesting that economists are no less nor no more likely to be co-operatives and others. More recently ¹³ Frank produced research which suggested that economic students tended to be markedly more corrupt than other students. This research has not been significantly challenged. Research on the role of finance and economics professionals in the global financial crisis ¹⁴ suggests that although personal ethics of these professionals were not significantly different from those of society as a whole the environment within which they operated, and the willingness to “play the game” demonstrate not precisely corruption but at least a willingness to subsume individual personal morals. Recent Japanese ¹⁵ and Swedish ¹⁶ studies suggest that the issue of honesty/corruptibility may be a key difference between economics and non economics majors. We thus have a body of people, powerful in general if that power is diffuse and delayed, who are markedly different to the rest of the society in which they exist.

There is of course a problem in this. It is entirely possible that people who would otherwise have displayed these propensities elected to take economics. In other words, economists might be begotten, not made. ^17-19 . More worryingly perhaps, the mere act of studying economics may actually induce changes in people’s behaviours, making them exhibit these characteristics. Economists can at times, especially in a small island like ours, act like a male middle class reenactment of ‘Heathers’ . It is a well-known psychological phenomenon that people in groups tend to develop more extreme views – the phenomena of group polarisation may mean that people who spend time with economists may well adopt more extreme versions of the views of economists. This is partially borne out by work of Bauman, ²⁰who notes that economic majors tend to donate much less to charity than non majors. They also find an indoctrination effect, where for non-economics majors, there is an inverse relationship between the number of economics courses taken and the amount of charitable giving. Haucap ²¹in a very recent study finds that the more economics students are exposed to the more likely they are to both be trusted by other students and to trust other students. They also find that this is primarily down to changes in the behaviour of female students, suggesting that there is both a gender and an indoctrination effect in place. When we consider the results of the research of May, ²² which suggests that female economists tend to be markedly different from males in their perspectives on issues such as minimum wages, equal opportunity, and insurance coverage, it would seem that the adage “Mama, don’t let your daughters grow up to be economists” might be want to be taken to heart. Portrafke ²³ finds that alone amongst university fields of study the studying of economics has a significant influence on the evolution of political attitudes.

In previous research Haucap ²⁴ found that students exposed to more economics judged the price method, as opposed to alternative approaches, to be the fairest and most appropriate way of distributing resources. Again, there is clear evidence here of a nurture effect, as well as possibly a nature effect. Suttner ²⁵ finds that as economists take more courses they become more sensitive to income loss as compared to other professional course members. Even just thinking about economics, framing a question as an economic question or even having economics related material objects in sight, can reduce compassion²⁶ and increase selfishness.^27,28.

While economists may profess to love the market mechanism, there is an exception – hiring. Its a do as I say, not as I do world at the top. Klein ²⁹noted that economics was much more a cultural pyramid than a market, with the top schools hiring from top schools, while Conley³⁰ shows that this ‘inbreeding’ is detrimental, productivity being only very weakly related to being a graduate from a ‘top’ economics department. Such is human nature, and the club nature of economics, characterised by such as a cant or argot and a need to be human, is well known (if not internalized) by economists from the work of McCloskey³¹ and Klamer ³²

It may well also be that economic students are neither selfish, nor morally incompetent. Knowing that there is a study underway, they may simply behave in a manner that they believe the professors expect. We may be seeing here a Hawthorne effect. Or they might just be duplicitous.  And, it’s not all bleak. While they might become, or have already been, selfish and greedy, recent research by Haucap ³³suggests that economists are happier than non-economists. So, you might be right of Gengish Khan, as liable to give money to the poor as Scrooge McDuck,  be part of a faculty ponzi scheme and be as compassionate as a hungover parking warden on a sleety saturday morning, but at least you will be happy!

Many of the characteristics noted above are not those that, I think, and this is purely subjective, society would want to inculcate in its graduates. And not every economist, or even person exposed to economics goes that way. But theres a broad, and to me sisturbing, tendancy evident from the research. Is it real? To check this we might want to suggest an experiment. This would ideally take the form of a longitudinal study. Students entering into university would be surveyed to surface the existence or otherwise of these propensities noted above. As students go through college their attitudes change. Tracking a large body of students, and investigating how their attitudes changed as between those who undertook economics courses vs those who did not, this might pay great dividends. It would be uncomfortable, and perhaps even seen as invasive, but unless we ask hard questions we will get only soft answers.

This is a longer version of a opinion piece in the Sunday Business Post, Sunday 26 October 2014

References

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