Is (teaching) Economics doing more harm than good?

evil_genius_economics_teacher_mousepad-rd83ec59497fd4d20a63447e4726107af_x74vi_8byvr_324Every September thousands of students enter into universities and institutes of higher education. A large number of these take some economics courses. Some 23% of all undergraduates are enrolled in social science/business/Law courses, where at least some introductory economics is very common. Economists also typically teach courses such as statistics, or introductory mathematics for social scientists. And yet, we have no idea whether or not this does any good. Much worse, we have no idea whether or not this does harm. Maybe we should find out?

Social sciences are different to the natural sciences. It is much more difficult and social sciences to obtain a definitive answer to a research question. For almost every question posed there will be opposing answers. Social science is messy. Social Science progresses slowly That said there is a significant body of evidence that suggests that we might want to be careful about exposing students to too much economics. We should be careful in interpretation of social science results. Economics is often stated to have physics envy, a hankering after the cleanliness and order of (classical, Newtonian) physics. All too often this desire for order manifests itself as meaningless statistical precision. As I constantly tell my students, it is much better to be approximately right than precisely wrong.  So, lets keep that in mind.

images (14)Economists are different. We have known for decades, from the pioneering work of Marwell and Ames1 that economists tend to be free riders and to have little notion of fairness. Allgood noted 2 recently that business majors views on volunteering, altruism etc tend to be closer to those of the general population then were those of economics majors. Kirchgässner 3 noted the propensity of people to vote against the recommendations of economists, suggesting that in effect the normative views of economists were simply different from those of the rest of society. Comparing 4 the views of ordinary citizens with economists, US researchers found very significant differences. Economists on the whole, seem to be remote in their views from those of the ordinary person, and are consequently greatly ignored by them. Politicians and policymakers however, they do not ignore the input of professional economists, although the views of economists are filters through of course political and pragmatic lenses 5. Thus a growing disconnect may well occur. Like it or not economics, and in particular ‘political economy’ involves economic experts making value judgements. Baujard 6 examines this issue, the tension between what claims to be a positive and is in fact a normative undertaking, and concludes that the very methodologies of economics are such as to force value judgements. This is echoed in Lepenies 7 examination of trade theory books, a wonderful example of the benefits of textual, hermanuetical analysis of the sort all too rarely seen in economics.  Gandal 8 suggests that compared to others economics students place greater value on power and achievement, that this strengthens with economic training and that this is persistent. My own research 9 suggests that Irish economists exhibited a significant degree of cognitive dissonance, advocating in public and professional environments issues with which they were personally uncomfortable. Wang 10 in recent research, noted that MBA students who had taken more economics courses tended to be greedier, and to believe in greed, than those who had not. They conclude “economics education may have serious, albeit unintended consequences on our students’ attitudes toward greed”.

greedExtremely well cited research by Frank 11 noted that economic professors tended to be at the very lowest end for professions in terms of charitable giving. In subsequent research 12 he noted that greater economic training tended to inhibit social cooperation. This research is not without controversy, with people such as Yezer suggesting that economists are no less nor no more likely to be co-operatives and others. More recently 13 Frank produced research which suggested that economic students tended to be markedly more corrupt than other students. This research has not been significantly challenged. Research on the role of finance and economics professionals in the global financial crisis 14 suggests that although personal ethics of these professionals were not significantly different from those of society as a whole the environment within which they operated, and the willingness to “play the game” demonstrate not precisely corruption but at least a willingness to subsume individual personal morals. Recent Japanese 15 and Swedish 16 studies suggest that the issue of honesty/corruptibility may be a key difference between economics and non economics majors. We thus have a body of people, powerful in general if that power is diffuse and delayed, who are markedly different to the rest of the society in which they exist.

heathersThere is of course a problem in this. It is entirely possible that people who would otherwise have displayed these propensities elected to take economics. In other words, economists might be begotten, not made. 17-19 . More worryingly perhaps, the mere act of studying economics may actually induce changes in people’s behaviours, making them exhibit these characteristics. Economists can at times, especially in a small island like ours, act like a male middle class reenactment of ‘Heathers’ . It is a well-known psychological phenomenon that people in groups tend to develop more extreme views – the phenomena of group polarisation may mean that people who spend time with economists may well adopt more extreme versions of the views of economists. This is partially borne out by work of Bauman, 20who notes that economic majors tend to donate much less to charity than non majors. They also find an indoctrination effect, where for non-economics majors, there is an inverse relationship between the number of economics courses taken and the amount of charitable giving. Haucap 21in a very recent study finds that the more economics students are exposed to the more likely they are to both be trusted by other students and to trust other students. They also find that this is primarily down to changes in the behaviour of female students, suggesting that there is both a gender and an indoctrination effect in place. When we consider the results of the research of May, 22 which suggests that female economists tend to be markedly different from males in their perspectives on issues such as minimum wages, equal opportunity, and insurance coverage, it would seem that the adage “Mama, don’t let your daughters grow up to be economists” might be want to be taken to heart. Portrafke 23 finds that alone amongst university fields of study the studying of economics has a significant influence on the evolution of political attitudes.

priceisrightIn previous research Haucap 24 found that students exposed to more economics judged the price method, as opposed to alternative approaches, to be the fairest and most appropriate way of distributing resources. Again, there is clear evidence here of a nurture effect, as well as possibly a nature effect. Suttner 25 finds that as economists take more courses they become more sensitive to income loss as compared to other professional course members. Even just thinking about economics, framing a question as an economic question or even having economics related material objects in sight, can reduce compassion26 and increase selfishness.27,28.

nepotismdemotivatorWhile economists may profess to love the market mechanism, there is an exception – hiring. Its a do as I say, not as I do world at the top. Klein 29noted that economics was much more a cultural pyramid than a market, with the top schools hiring from top schools, while Conley30 shows that this ‘inbreeding’ is detrimental, productivity being only very weakly related to being a graduate from a ‘top’ economics department. Such is human nature, and the club nature of economics, characterised by such as a cant or argot and a need to be human, is well known (if not internalized) by economists from the work of McCloskey31 and Klamer 32

download (6)It may well also be that economic students are neither selfish, nor morally incompetent. Knowing that there is a study underway, they may simply behave in a manner that they believe the professors expect. We may be seeing here a Hawthorne effect. Or they might just be duplicitous.  And, it’s not all bleak. While they might become, or have already been, selfish and greedy, recent research by Haucap 33suggests that economists are happier than non-economists. So, you might be right of Gengish Khan, as liable to give money to the poor as Scrooge McDuck,  be part of a faculty ponzi scheme and be as compassionate as a hungover parking warden on a sleety saturday morning, but at least you will be happy!

Many of the characteristics noted above are not those that, I think, and this is purely subjective, society would want to inculcate in its graduates. And not every economist, or even person exposed to economics goes that way. But theres a broad, and to me sisturbing, tendancy evident from the research. Is it real? To check this we might want to suggest an experiment. This would ideally take the form of a longitudinal study. Students entering into university would be surveyed to surface the existence or otherwise of these propensities noted above. As students go through college their attitudes change. Tracking a large body of students, and investigating how their attitudes changed as between those who undertook economics courses vs those who did not, this might pay great dividends. It would be uncomfortable, and perhaps even seen as invasive, but unless we ask hard questions we will get only soft answers.

This is a longer version of a opinion piece in the Sunday Business Post, Sunday 26 October 2014


1. Marwell, G. & Ames, R. E. Economists free ride, does anyone else? J. Public Econ. 15, 295-310 (1981).

2. Allgood, S., Bosshardt, W., van der Klaauw, W. & Watts, M. Is Economics Coursework, or Majoring in Economics, Associated with Different Civic Behaviors? J. Econ. Educ. 43, 248-268 (2012).

3. Kirchgässner, G. (Why) are economists different? Eur. J. Polit. Econ. 21, 543-562 (2005).

4. Sapienza, P. & Zingales, L. Economic experts versus average americans. in Am. Econ. Rev. 103, 636-642 (2013).

5. Hirschman, D. & Berman, E. P. Do Economists Make Policies? On the Political Effects of Economics. Socio-Economic Rev. 1-33 (2014). doi:10.1093/ser/mwu017

6. Baujard, A. Value judgments and economics expertise. Work. Pap. (2013). at <;

7. Lepenies, R. Economists as political philosophers : a critique of normative trade theory. RSCAS Work. Pap. at <;

8. Gandal, N. Personal value priorities of economists. Hum. Relations 58, 1227-1252 (2005).

9. Lucey, B. M. & Delaney, L. A psychological, attitudinal and professional profile of Irish economists. J. Socio. Econ. 36, 841-855 (2007).

10. Wang, L., Malhotra, D. & Murnighan, J. K. Economics education and greed. Acad. Manag. Learn. Educ. 10, 643-660 (2011).

11. Frank, R. H., Gilovich, T. & Regan, D. T. Does Studying Economics Inhibit Cooperation? J. Econ. Perspect. 7, 159-171 (1993).

12. Frank, R. H., Gilovich, T. D. & Regan, D. T. Do Economists Make Bad Citizens? J. Econ. Perspect. 10, 187-192 (1996).

13. Frank, B. & Schulze, G. G. Does economics make citizens corrupt? J. Econ. Behav. Organ. 43, 101-113 (2000).

14. Van Hoorn, A. The Global Financial Crisis and the Values of Professionals in Finance: An Empirical Analysis. J. Bus. Ethics (2014). doi:10.1007/s10551-014-2225-5

15. Iida, Y. & Oda, S. H. Does Economics Education Make Bad Citizens? The Effect of Economics Education in Japan. J. Educ. Bus. 86, 234-239 (2011).

16. Carlsson, F., Kataria, M., Lampi, E. & Levati, M. V. Doing good with other people’s money: A charitable giving experiment with students in environmental sciences and economics. (2011). at <;

17. Frey, B. S. & Meier, S. Are political economists selfish and indoctrinated? Evidence from a natural experiment. Econ. Inq. 41, 448-462 (2003).

18. Frey, B. S. & Meier, S. Selfish and indoctrinated economists? in Eur. J. Law Econ. 19, 165-171 (2005).

19. Cipriani, G. Pietro, Lubian, D. & Zago, A. Money illusion: Are economists different? Econ. Bull. 1, (2008).

20. Bauman, Y. & Rose, E. Selection or indoctrination: Why do economics students donate less than the rest? J. Econ. Behav. Organ. 79, 318-327 (2011).

21. Haucap, J. & Müller, A. Why are Economists so Different? Nature, Nurture and Gender Effects in a Simple Trust Game. (2014). at

22. May, A. M., McGarvey, M. G. & Whaples, R. Are Disagreements Among Male And Female Economists Marginal At Best?: A Survey Of AEA Members And Their
Views On Economics And Economic Policy. Contemp. Econ. Policy 32, 111-132 (2014).

23. Potrafke, N., Fischer, M. & Ursprung, H. Does the Field of Study Influence Students’ Political Attitudes? Annu. Conf. 2013 Compet. Policy Regul. a Glob. Econ. Order (2013). at <;

24. Haucap, J. & Just, T. Not guilty? Another look at the nature and nurture of economics students. Eur. J. Law Econ. 29, 239-254 (2009).

25. Suttner, J. R. Sensitivity of economists during market allocation. CIW Discuss. Pap. (2014). at <;

26. Molinsky, A. L., Grant, A. M. & Margolis, J. D. The bedside manner of homo economicus: How and why priming an economic schema reduces compassion. Organ. Behav. Hum. Decis. Process. 119, 27-37 (2012).

27. Liberman, V., Samuels, S. M. & Ross, L. The name of the game: predictive power of reputations versus situational labels in determining prisoner’s dilemma game moves. Pers. Soc. Psychol. Bull. 30, 1175-85 (2004).

28. Kay, A. C., Wheeler, S. C., Bargh, J. A. & Ross, L. Material priming: The influence of mundane physical objects on situational construal and competitive behavioral choice. Organ. Behav. Hum. Decis. Process. 95, 83-96 (2004).

29. Klein, D. B. The Ph.D. Circle in Academic Economics. Econ J. Watch 2, 133-148 (2005).

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33. Haucap, J. & Heimeshoff, U. The Happiness of Economists: Estimating the Causal Effect of StudyingEconomics on Subjective Well-Being. Int. Rev. Econ. Educ. (2014). doi:10.1016/j.iree.2014.08.004

16 thoughts on “Is (teaching) Economics doing more harm than good?

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  4. Paul Dolan

    I always associated greed and selfishness with business students and felt that those of us who studied economics were more scientific and more rigorous in our approach but now I wonder were we just suffering from physics envy. I am not sure that rates of charitable giving are an accurate measure of compassion. I will admit that studying economics made me doubt the efficacy of charity to really help people other than in the most short term way. I suppose my politics were more powerful than my studies and I just became more convinced of the need for structural change and income redistribution.

    1. brianmlucey Post author

      Longer : I suspect that there is a probable nonlinear relationship and that some other courses can either reinforce or negate the EcoVirus. What they are would be really good to know

  5. Thornton Hall

    I took a look at Brad DeLong’s syllabus for Econ 101. By week three students were doing problem sets. But there had not been a single lecture on actual human behavior.

    Can you imagine students in psychology turning in a midterm that was all theory?

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  7. JJ Wayne

    Current economics is a psedu science. If young kids do not fully know that,it is very harmful.

    Laws of supply and demand are not real laws. People have free wills. They don’t react like a pre-programmed machine. Most markets have inventories. If you walk into an auto dealer, the supply is far more than the demand. The supply and demand curves will never cross. There is no market equilibrium. And most markets do carry inventories. By definition, inventory means marketers do not completely clear, and supply always exceeds demand.

    Economics is a psedo science. Yet we still have to teach kids economics. It is a paradox.

  8. JJ Wayne

    The way I approached this problem is focusing on working of economic reality.

    Teach kids to think like dealers, auto makers, and auto buyers: how dealers manage their inventories, how to forecast the potential demand, and how to set the prices competitively, etc.

    That kind of economics is a science about how the reality works. It is just like physics.

    1. Patrick

      Actually the study of inventories, changes in inventories and how they effect the economy are a large subject in economics. Inventories don’t really destroy demand supply relationships, but are rather part of them.

      Seeing how businesses set inventory levels is interesting, but economics tries to assess the aggregate effect of changes in inventory levels and the effect this will have.

      Not sure pseudo science is a useful label. I think economic history seems like a good way forward. Ultimately economics can only work as a quantitative subject if what comes first is a historical and contextual narrative, with movements charted out, and then support given by quants. This is a bit different to the way science works. Repeated testing, and randomised control testing are impossible. There is nothing wrong with this, but it should be recognised, and all this physics envy left behind.

      The label ‘pseudo science’ just further emphasizes the science fetish.

  9. Abe

    I graduated with a Bachelor’s of Science in Economics (with honors) and absolutely loved most of my Econ classes. Economics taught me how to think in a clear, comprehensive, and orderly fashion. And yes, learning to think like an Economist does make one more… analytic and pragmatic, mostly because we learn to look at things like incentives, moral hazards, supply and demand, elasticities, free riders, rent seeking, public finance, environmental economics, arms races, etc… Through the course of it all it becomes apparent that most people are pretty self-interested and that few people truly do anything for the greater “good.” Everyone has an agenda. If we care about the environment it is driven by specific reasons… Reasons we may rarely or never verbalize, but reasons nonetheless. If we do charity, there are reasons why we do so, both intangible and tangible. We always act in our own self-interest. Perhaps you do charity because of the tax write-off or because it makes you feel good. Or perhaps you don’t do charity because in your analysis it doesn’t solve the problems it purports to. In any case, I think Economics is one of the most important things an educated citizenry cab study, and should (agreeably a normative statement).

  10. Seanán Kerr (@seanan_kerr)

    If I were to guess, I’d guess there are two under lying factors behind this.

    Firstly the psychology of money, there is a lot of evidence that points to even thinking about money as driving selfish behaviour (as well as poorer outcomes on complicated tasks when cash incentives are offered). For example in one experiment after priming the subjects to think about money…

    “Vohs got her result only after the ­subject believed the session was over. Heading for the door, he would bump into a person whose arms were piled ­precariously high with books and office supplies. That person (who worked for Vohs) would drop 27 tiny yellow pencils, like those you get at a mini-golf course. Every subject in the study bent down to pick up the mess. But the money-primed subjects picked up 15 percent fewer pencils than the control group.”

    Now if that’s the effect you can get from thinking about money in a short-term experiment, what effect would you get after years of studying macro economics, in deep concentration on figures in the billions in your mind and on paper? It’s at least plausible you’d see a similar effect, and if it were a similar effect, then the greater time and deeper though given would again suggest the effect could be potentially far greater than picking 15% fewer pencils. If it was somewhat to do with the psychology of thinking about money, then it fits the pattern of the effect getting worse the more you study the subject.

    Secondly there’s cognitive dissonance, if the history of religion tell us anything it’s that human are more interested in having an answer, not necessarily the correct one. If the system is -as a lot of hard evidence shows- inherently loaded in favour of inequality, then rather than have to deal with hard problem, the brain sweeps the problem under the carpet, it becomes rationalised, what is outwardly unfair, becomes instead a manifestation of a natural order.

    Throw in how such a world view, ‘keep the powerful powerful’, is of course inherently appealing to power and thus is indulged, publicised and encouraged, (apart from the odd time this the prevalence of this view ends up blowing up the economy) and there you have it.

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