Economists are horrible people

I don’t think this is a particularly meaningful statement. But it’s certainly an attention grabbing one. I encountered it earlier when Salon picked up on a post by Adam Grant on Psychology Today:

Why does the invisible hand want to slap you across the face?

Because it belongs to a douchebag.

That’s the conclusion, anyway, of aprovocative blog post in Psychology Today by Wharton professor Adam Grant making the rounds across planet internet.

But before all you econ majors get your demand curves in a twist, hear what the good professor has to say.

Citing research by Cornell professor Robert Frank, Grant makes the compelling case that economists are neither generous, nor cooperative. And that’s because they’ve swallowed one of Adam Smith’s main tenets: people act out of rational self-interest.

Emphasis here on the self.

In short: economists don’t feel bad about acting in their self-interest because — well — the economic theories tell them that they should be selfish.

This is the same Adam Grant who’s achieved an impressive degree of visibility at a relatively young age, not least of all because of the snappily counter-intuitive thesis propounded in his last book that ‘giving’ is a route to career success. As befitting the youngest tenured professor at the Wharton Business School*, his claim about economists is one grounded in empirical research:

Robert Frank, an economist at Cornell, believes that his profession is squashing cooperationand generosity. And he believes he has the evidence to prove it. Consider these data points:

Less charitable giving: In the US, economics professors gave less money to charity than professors in other fields—including history, philosophyeducation, psychology, sociology, anthropology, literature, physics, chemistry, and biology. More than twice as many economics professors gave zero dollars to charity than professors from the other fields.

More deception for personal gain: Economics students in Germany were more likely than students from other majors to recommend an overpriced plumber when they were paid to do it.

Greater acceptance of greed: Economics majors and students who had taken at least three economics courses were more likely than their peers to rate greed as “generally good,” “correct,” and “moral.”

Less concern for fairness: Students were given $10 and had to make a proposal about how to divide the money with a peer. If the peer accepted, they had a deal, but if the peer declined, both sides got nothing. On average, economics students proposed to keep 13% more money for themselves than students from other majors.

In another experiment, students received money, and could either keep it or donate it to the common pool, where it would be multiplied and divided equally between all participants. On average, students contributed 49% of their money, but economics students contributed only 20%. When asked what a “fair” contribution was, the non-economists were clear: 100% of them said “half or more” (a full 25% said “all”). The economists struggled with this question. Over a third of them refused to answer it or gave unintelligible responses. The researchers wrote that the “meaning of ‘fairness’… was somewhat alien for this group.

This raises the obvious question of causation: does economics make people horrible or are horrible people drawn to economics? Obviously, it’s likely to be a little of both. It seems glaringly self-evident to me that self-selection is at work in shaping the characteristics of people within different disciplines (not least of all because I have a few hundred surveys from my PhD that demonstrate precisely this). There is a sense in which it is meaningful to talk about ‘physics people’ and ‘english literature people’, though these are of course fuzzy folk typologies which barely meet the status of being an empirical generalisation. Where I think they become more plausible though, is in making sense of the mentalities likely to be found amongst professionalised members of disciplines i.e. though who keep on self-selecting all the way through to grad school and beyond. So could we assume on this basis that the processes identified amongst economics students are likely to apply with a greater intensity amongst professional economists? Here’s what Grant suggests with regard to the former:

To figure out whether economics education can shift people in the selfish direction, we need to track beliefs and behaviors over time—or randomly assign them to economics exposure. Here’s what the evidence shows:

1. Altruistic Values Drop Among Economics Majors

At the very beginning of their freshman year, Israeli college students who planned to study economics rated helpfulness, honesty, loyalty, and responsibility as just as important as students who were studying communications, political science, and sociology. But third-year economics students rated these values as significantly less important than first-year economics students.

2. Economics Students Stay Selfish, Even Though Their Peers Become More Cooperative

When faced with choices between cooperating and defecting, overall, 60% of economics majors defected, compared with only 39% of non-economics majors. For non-economists, 54% of freshmen and sophomores defected, while only 40% of juniors and seniors did. The economists, on the other hand, did not decrease in defection significantly over time. Roughly 70% defected across the board. Non-economists became less selfish as they matured; economists didn’t.

3. After Taking Economics, Students Become More Selfish and Expect Worse of Others

Frank and his colleagues studied college students in astronomy, economic game theory, and economic development classes. Self-interest was a fundamental assumption in the game theory class, but had little role in the economic development class. In all three classes, students answered questions about benefiting from a billing error where they received ten computers but only paid for nine and finding a lost envelope with $100. They reported how likely they would be to report the billing error and return the envelope, and predicted the odds that other people would do the same.

When the students answered these questions in September at the start of the semester, the estimates were similar across the three classes. When they answered the questions again in December at the end of the semester, Frank’s team tracked how many students decreased their estimates. After taking the game theory course, students came to expect more selfish behavior from others, and they became less willing to report the error and return the envelope themselves.

“The pernicious effects of the self-interest theory have been most disturbing,” Frank writes in Passions Within Reason. “By encouraging us to expect the worst in others it brings out the worst in us: dreading the role of the chump, we are often loath to heed our nobler instincts.”

4. Just Thinking about Economics Can Make Us Less Caring

Exposure to economic words might be enough to inhibit compassion and concern for others, even among experienced executives. In one experiment, Andy Molinsky, Joshua Margolis, and I recruited presidents, CEOs, partners, VPs, directors, and managers who supervised an average of 140 employees. We randomly assigned them to unscramble 30 sentences, with either neutral phrases like [green tree was a] or economic words like [continues economy growing our].

Then, the executives wrote letters conveying bad news to an employee who was transferred to an undesirable city and disciplining a highly competent employee for being late to meetings because she lacked a car. Independent coders rated their letters for compassion.

Executives who unscrambled sentences with economic words expressed significantly less compassion. There were two factors at play: empathy and unprofessionalism. After thinking about economics, executives felt less empathy—and even when they did empathize, they worried that expressing concern and offering help would be inappropriate.

I recall encountering more work exploring this issue in the past and I really wish I’d saved the references. It also leads me to wonder if economists have a unusual proclivity for empirically studying themselves and, if so, what this says about the discipline in general and these findings in particular? As naval gazing as sociologists tend to be, they also seem to spend little time studying themselves, at least in a systematic way.

Categories: Higher Education, Outflanking Platitudes

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