Why Should(n’t) You Study Economics? (Part 2)

In my last post, I outlined some of the stereotypes associated with econ majors and why I personally decided to major in economics. For this post, however, I am planning to address research and opinions which say that economics makes you a bad person, or more specifically, ” to exhibit a range of “debased” moral behavior and attitudes” (Etzioni, 2015). For this post I will be citing some relevant academic literature, explaining via examples, and trying to correct what I view as a fundamental misunderstanding of economics.

Much of the sociological research, as well as a number of blog posts, describe economists and economics students as self-interested and antisocial. The point of this post is not to dissect their experiments and apply methodological critiques, as others have done. I want to clarify why I don’t think their arguments paint a complete picture.

To summarize the research, it has been found both by economists and others, that being an economist makes you more inclined to free ride in a public goods scenario (Marwell & Ames, 1981). Also, in a survey of charitable giving, 9.3 % (so 90.7% gave some!) of economics professors reported giving no money to charity, as opposed to 1.1-4.2% for other disciplines surveyed (Frank, Gilovich, & Regan, 1993). For students, a 2011 study by University of Washington professors Yoram Bauman and Elaina Rose indicated that:

  • Economics majors are less likely to donate than other non-majors.
  • Taking economics classes makes non-majors less likely to donate.
  • Taking economics classes does not make economics majors less likely to donate.

It may be possible to explain some of these results as an issue of self-selection. Maybe selfish people are more likely to study economics or take a class in it, so these results are a function of that inherent propensity for selfishness. Many of the results have been derived from experiments such as: the ultimatum game, the prisoner’s dilemma, and public goods games. Many of these examine ideas of fairness, social good, and selfishness. While they help to examine these ideas, I think there are limitations associated with applying them to real life. For me personally, I know that I will often “defect” in a prisoner’s dilemma game which defect is a Nash-equilibrium, but if I had a chance to talk to the person, I would try and maximize the socially optimal gains. For an example of this, see a previous post about the British game show, Golden Balls.

When I asked a friend of mine, who is a junior SOAN major, why sociology thinks econ majors are bad people, she reminded me of an interaction we had the week before. She saw me in a campus coffee shop and told me that I should go get my flu shot. I countered with an economic argument for why I shouldn’t get my flu shot; basically, that the marginal benefit I receive from going and getting a shot is less than my marginal cost, as well as the opportunity cost of getting the shot (I can’t remember if the shot was “free” or had a monetary cost of $25). She responded by talking about herd immunity and the benefits to others, which I considered that Saturday when I actually got my flu shot.

Some sociologists have hypothesized that simply teaching models of Homo economicus, or the completely rational, purely self-interested economic person may make students more selfish and less cooperative. It is possible that seeing this as a model influences students into believing contributing to a public good is always a poor choice (it isn’t necessarily), that you should always defect in prisoner’s dilemmas (it depends on the payoff, and whose utility you’re trying to maximize), and that consumption will always make you better off (even Adam Smith quibbles with this in his Theory of Moral Sentiments). This isn’t to say that the modeling simplicity of these assumptions isn’t valuable, it just may be giving people the wrong impression. As I have been learning about contradictions and challenges to the typical economic framework in my behavioral economics courses, it shows that economists understand that the assumptions they make do not define the real world. In talking to professors and reading academic papers, it becomes clear that they know and acknowledge that the assumptions made often drive results. To some extent, economics is a discipline which makes claims based on very specific criteria, and issues can arise when people try and transfer these insights into domains that fail to meet those criteria. This is where economic claims suffer from interpretations by politicians, other disciplines, and even undergraduate economics majors in their senior year at the University of Puget Sound.

Contrary to how many sociologists and Econ 101 students understand rationality, when I got a flu shot, I wasn’t being irrational, because it was consistent with my other-regarding preferences. Also referred to as social preferences, these preferences assume that people “not only care about their own attainment but about other people’s attainment too” (Angner, 2012). I think one of the issues within economics is that this framework often doesn’t come across, though it may be that intro students and others fail to perceive this subtlety. If this is the case, I would argue that it should be made more apparent.

Another example of a seemingly irrational decision may be helpful, as one could argue that a flu shot could be construed as self-interested in that it protects my own health. About a month ago, I gave blood to a local blood drive. Here, the costs were apparent (time, dealing with needles, etc) whereas I can’t come up with a personal benefit I received, aside from potentially warm-glow altruism, which is a topic for another time. While I understood that economics allowed for people to care about others, my behavioral economics and microeconomics courses have proved most helpful in giving me a framework to examine them via, with utility functions and other ideas. This is one of my guesses as to why people who take an intro course often come away with an incomplete understanding of rationality, because it is implicitly expressed that rationality isn’t the same thing as selfishness, rather than explicitly.

Lastly, some people have noticed a discrepancy between these results and the public statements of widely-regarded top economists. A psychologist, Gizem Saka, published a blog post titled Why Does Studying Economics Hurt Ethical Inclinations? In it, she referenced a statement by Gary Becker, winner of the 1992 Nobel Prize in Economics, in which he said,

I learned in the first economics course I took that economics could deal rigorously, à la mathematics, with social problems. That stimulated me because in economics I saw that I could combine both the mathematics and my desire to do something to help society.

Saka goes on to contrast this to empirical findings, and draws attention to the difference between these socially-motivated, upper-echelon economists and others. I think that this again fails to address the difference between teaching self-interested models of human behavior, and the value judgement that people should be purely self-interested! It seems to me that many of the negative positions about economics and economists come from overly simplistic understandings, or a misunderstanding of the underlying principles.

I would also like to very directly acknowledge that I am not an expert in economics, and that the opinions within this post come mostly from observations and thoughts that have occurred to me. Lastly, I’ll conclude this article with a quote from Austrian economist Friedrich Hayek,

The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design.

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