Are economists selfish? A lit review

Econlib’s previous discussion of my NYT op-ed was sidetracked, so in the interest of bringing the focus back to the question of whether or not economists are selfish and (if so) whether economics educations makes them so, I am offering up a selected lit review. I do not claim that this lit review is complete or unbiased, but I do claim that it will make you think twice about dismissing my work. More comments from me at the bottom, and for even more on the existing literature I recommend the discussions in Frey and Meier (2003), Wang et al. (forthcoming)—both discussed below—or my peer-reviewed journal article with Elaina Rose.

Marwell and Ames, 1981. “Economists free ride, does anyone else?” Journal of Public Economics 15: 295-310. They conducted a public-goods game by giving individuals 250 “tokens” and asking them how many tokens they wanted to invest on an “individual exchange” versus a “group exchange”; payoffs were set up to create a tragedy-of-the-commons situation, i.e., each individual can maximize their own payoff by free-riding, but if everybody invests in the group exchange then everyone is better off than if everybody invests in the individual exchange. They found that contributions to the group exchange from economics graduate students were about half those from others (20% versus 41%). They also asked questions about “fairness” and noted: “There was surprising unanimity of thought [among everyone except the econ grad students] regarding what was considered fair… [In contrast, m]ore than one-third of the economists either refused to answer the question regarding what is fair, or gave very complex, uncodable responses. It seems that the meaning of ‘fairness’ in this context was somewhat alien for this group. Those who did respond were much more likely to say that little or no contribution [to the group exchange] was ‘fair’. In addition, the economics graduate students were about half as likely as other subjects to indicate that they were ‘concerned with fairness’ in making their investment decision.”

Carter and Irons, 1991. “Are economists different, and if so, why?” Journal of Economic Perspectives 5:171-177. Their ultimatum game experiment found that economics students made lower offers and had lower minimum acceptable offers, and they argue that “economists are born, not made”: “[W]e use a simple ultimatum bargaining experiment to test whether economics students behave more in accordance with predictions of the rational/self-interest model of economics. Finding that a behavioral difference does exist, we then conduct tests to discriminate between the selection and learning hypotheses… To summarize, we find that economists are different, but they are already different when they begin their study of economics.”

R. Frank et al., 1993. “Does studying economics inhibit cooperation?” Journal of Economic Perspectives 7:159-171: “A variety of evidence suggests a large difference in the extent to which economists and noneconomists behave self-interestedly. We believe our survey of charitable giving and our prisoner’s dilemma results lend additional support to the hypothesis that economists are more likely than others to free-ride… We also found evidence consistent with the view that differences in cooperativeness are caused in part by training in economics.”

B. Frank and Schulze, 2000. “Does economics make citizens corrupt?” Journal of Economic Behavior and Organization 43:101-113. Their experiment involved giving students an opportunity to receive a bribe (up to a maximum of about $72) for recommending a plumber. Of the 190 students sampled, one name was randomly chosen to actually receive whatever bribe they had designated: “In this paper, we report on an experiment on corruption which investigates various determinants of corruptibility. We found that economics students are significantly more corrupt than others, which is due to self-selection rather than indoctrination.”

Frey and Meier, 2003. “Are political economists selfish and indoctrinated? Evidence from a natural experiment”, Economic Inquiry 41:448-462. This study is very similar to my work with Elaina Rose in that it looks at donations by students, in this case at the University of Zurich, where students are asked if they want to donate small sums to “a fund that offers cheap loans to needy students” and/or “a second fund supporting foreigners who study at the University of Zurich.” They find that “[p]olitical economists (to use the classical term) are not more selfish than the average student, but students of business economics are” and that “[the] higher level of selfishness of business students is due to self-selection, not indoctrination.”

Rubinstein 2006. “A sceptic’s comment on the study of economics”, The Economic Journal 116: C1-C9: “A survey was carried out among two groups of undergraduate economics students and four groups of students in mathematics, law, philosophy and business administration. The main survey question involved a conflict between profit maximisation and the welfare of the workers who would be fired to achieve it. Significant differences were found between the choices of the groups.”

Wang et al., forthcoming. “Economics Education and Greed”, Academy of Management Learning & Education: “The recent financial crisis, along with repeated corporate scandals, raise serious questions about whether a business school education contributes to what some have described as a culture of greed. The dominance of economic-related courses in MBA curricula led us to assess the effects of economics education on greed in three studies using multiple methods. Study 1 found that economics majors and students who had taken multiple economics courses kept more money in a money allocation task (the Dictator Game). Study 2 found that economics education was associated with more positive attitudes towards greed and towards one’s own greedy behavior. Study 3 found that a short statement on the societal benefits of self-interest led to more positive ratings of greed’s moral acceptability, even for non-economics students. These effects suggest that economics education may have serious, albeit unintended consequences on our students’ attitudes towards greed.”

Bauman and Rose, 2011. “Selection or indoctrination: Why do economics students donate less than the rest?” Journal of Economic Behavior and Organization 79: 318-327: “A substantial body of research suggests that economists are less generous than other professionals and that economics students are less generous than other students. Following Frey and Meier (2003), we address this question using administrative data on donations to social programs by students at the University of Washington. Our data set allows us to track student donations and microeconomics training over time in order to distinguish selection effects from indoctrination effects. We find that there is a selection effect for economics majors, who are less likely to donate than other students, and that there is an indoctrination effect for non-majors but not for majors.”

Yoram’s conclusions

My work with Elaina Rose has been dismissed (e.g., by Steve Landsburg) on the grounds that students who choose not to contribute to a group dedicated to reducing tuition fees for students could be concerned about the welfare of taxpayers rather than just free-riding.

My first conclusion is that I find this alternative explanation to be possible, and so I agree that Elaina Rose and I have not proved that economists students are more selfish than others. But I hasten to add that we never claimed to have proved this. The idea that we proved something came (in my opinion) from Landsburg’s odd perspective and from David Henderson’s equally odd discussion of how Rose and I were guilty of “affirming the consequent”.

My second conclusion is that I find this alternative explanation to be implausible, especially in light of the preceding literature, and therefore I believe that our work supports the conclusion that economists are more selfish than others. That is all that we claim in our paper, and it is all that I claim in my NYT op-ed. In the words of R. Frank et al. (1993), “As always, questions can be raised about experimental design.” But you shouldn’t miss the forest for the trees.

6 responses to “Are economists selfish? A lit review”

  1. I don’t see how your work supports anything significant, because two completely diametric explanations are entirely consistent with your data. Maybe the undergrads don’t want to give money to the group, even though they think the group increases social welfare on the whole, because they value their own utility over social utility. Or maybe they don’t think the the group increases social welfare (college fees subsidies are a contentious issue with significant divides) and so have no interest in donating groups they don’t support politically, rather than out of selfishness.

    Further, I agree with one of the papers you cited, I believe the causality is reversed, a lot of people pick economics because they seek a job in finance or business, I don’t think its controversial that these people might be marginally more selfish, so it is selfish people picking economics, rather than economics making people selfish: “They find that “[p]olitical economists (to use the classical term) are not more selfish than the average student, but students of business economics are” and that “[the] higher level of selfishness of business students is due to self-selection, not indoctrination.”

  2. Nice piece. And I agree with the conclusion of your NYT piece that instruction in economics should do more to point out those aspects of economic systems that do not benefit by totally EMH thinking. There are enough of them around; it shouldn’t be hard to include that in introductory economics courses.

    To take pollution as an example, one reason it’s rational to use the environment as a free sewer is because no charge is levied for that use. It would seem that the only way to approach the environment and other common goods from a rational economic perspective is to create a structure that can assess value. But that means some sort of collective behavior. There is nothing that violates economic principles about collective behavior, but it just isn’t taught. (Actually, I’m not an economic, so I don’t really know that that’s true.) There is more to economic reality than individual choice but that this other side isn’t part of the standard curriculum.

  3. What I think would be interesting would be a survey which takes account of what Economics majors would rather have been studying if they felt they had what it takes to be outstandingly creative in that field. My feeling is that Econ is a second order discourse which one elects for because there is a first order discipline in which one is not confident of being so spectacularly good as to gain an equal livelihood.
    As a pedagogy, Econ is a safe and Scholastic harbour for failed Math mavens, failed analytical philosophers, failed Antrhopologists, Psychologists etc.. Committing to it is a confession of having failed as a human being in advance. Thus, Economists will show less emotional intelligence and more Sociopathy than other groups and may indeed gain a psychic benefit from ‘tragedy of the commons’ type situations.
    In the survey I propose, it would be nice to distinguish between the base-line nice guy who took to Econ coz he always wanted to be in modelling but looked like a sack of shit- Paul Krugman right?- and the guy who failed to make the grade as a Math maven coz he couldn’t see ways of unifying things on the basis of greater generality, or, indeed, the wood for the trees anywhere anytime- Steve Lansburg comes to mind- who is bound to score high on sociopathy facilitate cynical availability cascades of the sort that have given Econ a bad name over the last thirty years.

  4. On balance, having had a chance to look at your results- there’s nothing there. All other disciplines may be indoctrinating and Economics, alone, not.
    The gender effect too argues for an observation effect.
    In any case, only shite Ango Econ is bereft of hermeneutic notions of Verstehen as underlying its activity. Zurich’s result is not reproducible across the board. Look at Graciella Chichilnisky & Geoff Heard and Olde Cambridge.

  5. Thanks for assembling this review!!

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