Thursday, January 07, 2016

In Search of the Moral Effects of Teaching Economics

[This post comments on Etzioni (2015).]
Amitai Etzioni’s recent post on Evonomics (which appeared in HuffPo in March 2015) relates to a 2015 paper of his published in Sociological Forum, "The Moral Effects of Economic Teaching." In the paper, he considers the question: Does exposure to the neoclassical[1] economics models taught in undergraduate economics classes lead to more "anti-social" (defined in the literature as more self-interested) or immoral/amoral behavior (usually defined as dishonest) exhibited by econ majors relative to non-econ majors? The paper then covers the experimental literature on this topic.
A distinction here must be made. Do economics courses teach one to act in a more self-interested or immoral way (called "indoctrination effects" in the literature)? Or is it simply that more self-interested people are drawn to study economics (self selection), perhaps because it bears a reputation for teaching models which adhere to their preconceived normative beliefs? The goal of Etzioni and others has been to tease out the pure indoctrination effects from the self-selection effects; given, of course, that economics majors exhibit more anti-social behavior in the first place.
Reading this paper, one is tempted to believe that there is an overwhelming consensus that economics majors, through indoctrination effects, exhibit more anti-social or immoral behavior. Even when covering studies finding evidence in favor of self-selection, Etzioni makes it clear that the indoctrination evidence is more compelling. In the same issue of Sociological Forum, we even find philosopher Michael Boylan (2015) supporting Etzioni with a consideration of how exactly economics is taught and how this is likely to create “a morally corrupting paradigm” (from Abstract).
I submit that a closer examination of the extant literature actually shows otherwise. The evidence we have so far is inconclusive at best. Etzioni's Evonomics article especially overstates this literature by removing qualification altogether and failing to cite studies which contradict his hypothesis.
Etzioni (2015) reserves 2 paragraphs for covering the studies which do not support the hypothesis that econ students exhibit anti-social behavior. Namely: 
[E]ven in games like the prisoner's dilemma, the economics students’ tendency to defect disappears when given the opportunity to interact with their fellow player beforehand and make promises to cooperate once the game has begun—a finding reported by Frank et al. (1993) and later replicated by Hu and Liu (2003). (Etzioni, 2015, p. 232)
This is an understatement. The experiment of Hu and Liu (2003) in fact finds that, after controlling for gender, grade, and whether promises of cooperation were made, “the probit of economists' cooperative moves is still 0.47 higher than that of noneconomists” (p. 693). Hu and Liu note that this finding contradicts Frank et. al. (1993) but is consistent with Lattimore (1992), a study that preceded both Frank et. al. and Etzioni (2015) yet didn’t get cited in the latter.[2] Moreover, this difference disappeared in the subsample in which promises to cooperate were made, similar to what Frank et. al. (1993) found.
An interesting note:
A more parsimonious interpretation of the results is that economists are more likely than others to promise to cooperate and more likely to persuade their partners to see things from their point of view. Therefore, having promised to cooperate, economists are as likely as others to keep their promises, and perhaps even more likely if the promises were made as a result of their leadership. However, as noted above, there is nothing in the material incentives confronting subjects that favors promise keeping, a fact that economists apparently understand better than others. In this regard, keeping promises entails a greater leap of altruistic faith on the part of economists than others. (Hu and Liu, 2003, p. 700).
[Emphasis mine.] Despite Hu and Lie finding evidence for pro-social behavior exhibited at a greater rate by economics majors, Etzioni (2015) does not include this study nor Lattimore (1992) in the paragraph explicitly listing studies with pro-social findings. 
To me, the naive reader, this implies that there are far fewer studies contradicting Metzioni's hypothesis than there actually are.

Faravelli (2007) provides a good summary of the literature since 1993:
Yezer et al. (1996) strongly criticised the results obtained by Frank et al. (1993) from a methodological point of view. They claimed that the evidence of that paper only implies that economics students display uncooperative behaviour in specialised games. They conducted a “lost-letter” experiment, in which envelopes containing currency are dropped in classrooms before the beginning of the lectures. The return rate on lost letters is used as a measure of co-operation. According to their results, the “real life” behaviour of economics students is actually more cooperative than that of subjects studying other disciplines. Similarly, Frey and Meier (2003) claim that “students may play the equilibrium learned in their economics classes, but they do not apply it to real life situations” (Frey and Meier, 2003, p. 448). Further, their results indicate that the particular behaviour of economists is only due to self-selection. On the basis of Yezer's results, Zsolnai (2003) suggests that there might be no contradiction between honesty and co-operation, which are two different qualities, and claims that economists' behaviour is characterised by respect for property rights and self-interest motivation simultaneously. Finally, Hu and Liu (2003) found evidence that economics students are more likely to co-operate in prisoner's dilemma games.
Etzioni (2015) cites the same Yezer et. al. paper, but fails to mention this methodological qualification.
Interestingly, Faravelli is making the sociological argument that context matters. Defining three resource allocations (Utilitarian, Rawlsian, and Egalitarian) he finds that when given enough information to place them in a “meaningful context” (e.g., one of the characters in a setting is physically handicapped), econ and sociology majors exhibit similar distributions of preferences over allocations, with the majority of both majors favoring Rawlsian allocations,[3] noting:
Our results indicate the presence of a learning effect that reflects an increasing appreciation for the [Rawlsian] principle. The latter does satisfy the Pareto criterion, which is not the case for the Egalitarian distribution. However, the shift in preferences is not at all in the direction of the Utilitarian solution, which suggests that senior students are no more concerned with the maximisation of output than their younger colleagues. Given that senior students of economics are more likely to favour inequality only if this implies making both the individuals better off, training in economics does not seem to have negative consequences.
[Bold emphasis mine, italics from the author.] Etzioni (2015) interestingly cites the same Faravelli paper as evidence in favor of an indoctrination effect, but seems to have missed the previous passage. Also, it is unclear if Etzioni would consider a Rawlsian allocation "moral."
Other recent experiments not mentioned in Etzioni (2015) include Muñoz-Izquierdo et. al. (2014), finding that while econ majors might be the most dishonest, they can also be the most altruistic. Hellmich (2012) presents what I hope is a more comprehensive survey of the relevant literature before 2012 than Etzioni (2015), and finds that the evidence so far is inconclusive at best.
Thus, I don’t find Etzioni's 2015 paper to be a complete literature review on this topic, Which brings me to his Evonomics post mentioned in the beginning. All I have to say is, at least Etzioni's 2015 paper managed to mention that there exist at least a few studies which don’t support his hypothesis. Now, it seems he is content to only mention those which agree with him, and assume that this very real problem is the result of closed-mindedness on the part of most mainstream economists:
Moreover, while practically all economic classes are taught in the “neoclassical” (libertarian, self centered) viewpoint, in classes by non-economists — e.g., in social philosophy, political science, and sociology — a thousand flowers bloom such that a great variety of approaches are advanced, thereby leaving students with a cacophony of conflicting pro-social views. What is needed is a systematic pro-social economics, that combines appreciation for the common good and for others as well as for the service of self. (Etzioni in Evonomics, 2016)
While I can’t say that a lack of pluralism is corrupting young economists, I am sympathetic to the call for more pluralism in economics for other reasons. For now I defer to David Colander (2000), who argues that modern mainstream economics is now more eclectic than ever before, although clearly it hasn’t submitted to the criticisms of all heterodox economists.

[1] - Although I am beginning to believe that this is no longer a useful term to describe modern mainstream economics, it probably describes the kind taught in introductory and intermediate courses.
[2] - There appears to be no version of Lattimore (1992) availble online, but here is the Google Scholar citation. It is in Volume 21 of Economic Notes, available in print.
[3] - i.e., greater inequality in resource distribution, but greater equality in individual welfare.

Boylan, M. (2015), Learning Economics: A Cautionary Tale. Sociological Forum, 30: 234–239. 
Colander, David. 2000. “The Death of Neoclassical Economics.” Journal of the History of Economic Thought 22(2): 127-143.
Etzioni, A. (2015), "The Moral Effects of Economic Teaching." Sociological Forum 30: 228–233. 

Faravelli, Marco. (2007). "How context matters: A survey based experiment on distributive justice." Public Economics 91(7-8): 1399-1422.

Frank, Robert H., Thomas Gilovich, and Dennis T. Regan. 1993. “Does Studying Economics Inhibit Cooperation?” The Journal of Economic Perspectives 7: 2: 159–171.
Hellmich, Simon Niklas. 2012. "Are Economists Selfish and Rational? And if so, Why?" Universität Bielefeld Fakultät für Soziologie Didaktik der Sozialwissenschaften Working Paper Nr. 4.
Hu, Yung-An and Day-Yang Liu. 2003. “Altruism Versus Egoism in Human Behavior of Mixed Motives.” American Journal of Economics and Sociology 62: 4: 677–705.
Mu˜noz-Izquierdo, Nora, Beatriz Gil-G´omez de Lia˜no, Francisco Daniel Rin-S´anchez, and David Pascual-Ezama. 2014. "Economists: cheaters with altruistic instincts." Munich Personal RePEc Archive Working Paper.
Lattimore, R. (1992). "Is it Rational to Be Rational? The Case of Economists." Economic Notes 21: 395-417.


  1. The paragraph from Faravelli contains hyperlinks that all route through the Rutgers proxy, which most of us can't use! You may want to fix that to direct to the actual links.

    Otherwise, good post!

    1. Thanks. They're now fixed.

      Note that some of the citations in this post are paywalled, but if you search the titles you'll probably find the published or working paper versions freely available online.