BRIAN LUCEY: Correlation between studying economics and greed

Economics often has an unfair reputation. In the public mind, economics is conflated with one of two things — either economists are talking about forecasts of the macro-economy, or talking about finance.

Economics, however, is a far broader discipline. It’s really about the application of the tools of economic analysis to almost any area of human behavior.

For people who doubt that this is the case, a look at the diversity and breath of papers presented at the American Economic Association meeting in Philadelphia would swiftly disabuse one of that notion.

Papers analyse the role of development, the history of technology, the impact of gender on boards, issues around birth order, and a whole plethora of socioeconomic issues.

One area in which economics might well be critiqued is in relation to gender. Perhaps the most impactful paper last year came not from a top-ranked Ivy League professor but
instead from an undergraduate.

Alice Wu undertook a detailed textual analysis of gender and racial discrimination and bias on a popular economics bulletin board. Within economics, it ignited a firestorm.

An updated version was presented in Philadelphia.

Beyond that, however, the Philadelphia meetings had been a wide-ranging and welcome discussion of the role of gender economics, the role of gender discrimination in bias in publication, and on efforts to ensure neutrality in terms of publication and tenure process. All this is welcome.

Economics as a profession has risen to the challenge of gender issues and at least seems to be serious about addressing it.

Beyond gender another issue remains. This is whether or not studying economics has an effect upon your brain.

An abundance of evidence suggests there is at least a correlation between studying economics and conservative or right-wing views.

There is an abundance of evidence, accumulated over decades, that economists tend to free ride more than those who have not studied economics. Recent research suggests MBA students who had taken more economics courses tended to believe in greed compared to those who had not.

The greater the exposure to economics courses, the less likely people are to give to charity, and more likely to have a tolerance for corruption. Most of these findings have been replicated across different cultures. Most of these findings tend to be relative to the general population.

More economics is also associated with a greater belief that market mechanisms and power of the market can achieve socially desirable outcomes.

More economic training is associated with more inhibition in terms of social co-operation. Some evidence suggests it is the active studying of economics that causes these changes.

The more economics courses students take the more sensitive they could become to income loss as opposed to distributional effects.

Interestingly these effects are significantly greater for non-economics majors than for economics majors.

In other words there is both the nature and nurture effect. Non-economics majors studying economics become more selfish than those who do not study economics. Economics majors do not exhibit this change of behaviour.

They are already coming into in an economics major more selfish than the non-economics majors peers.

Thinking about issues in economics as opposed to other terms frames one and predisposes one to be more selfish and less compassionate.

While all of these individual researchers can be challenged, the broad thrust of results is reasonably well attested.

I might suggest it’s a greater problems than gender. The economics profession is a reflection of the society in which it is embedded. If there are few female senior economists, and there are, that’s a societal problem as much as a problem of the profession.

Across all areas of society we need to ensure we de-bias in relation to gender.

But what if the studying of economics itself induces behaviour which is not socially desirable? What if mere exposure to the issues, framed in economic terms, causes a shift of
perception? Is it possible to rewire the entire methodology of a profession?

Brian Lucey is professor of finance at the School of Business, Trinity College Dublin.


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