In defence of economists

I see that the Listener (ht Agnitio) has picked up on this piece on psychology today (ht Andrew F), which claims that an education in economics inherently changes our behaviour making economists worse citizens.

At first brush I would like to note that we have a psychology lecturer suggesting that this implies more people should study psychology – it might be the economist in me talking but this sounds a bit like these recommendations are a touch self-interested themselves 😉

But this would be a digression.  While I don’t disagree that economists do need to be humble about the conditional nature of their knowledge (a point that holds equally for other social, and physical, sciences mind you!) I stick by my general conclusion that:

Saying “we shouldn’t look at trade-offs because then we lose our sense of community” sounds strangely like “we shouldn’t study the natural world or we will lose our sense of faith” don’t you think

Economics is a descriptive discipline that uses specific counterfactuals to try to interpret our limited, and fuzzy, data on social co-ordination.  Just look at how often we discuss co-ordination here – and we fit into the “business economist” category that is most maligned by these articles!

Now much of the psychology today article relies on one reference that it links to repeatedly – ‘Does studying economics inhibit cooperation?” [REPEC].  This paper is about economics training 20 years ago, and discusses survey results.  You may wonder why survey results would matter – especially if you trust the papers that suggest there is no difference between how people act in hypothetical situations and in situations where actual money is on the line [an assumption I still view as up for grabs!].

Well I would still be a bit careful here!  After all, the size of the reward does have an impact on decision making.  And the differences in hypothetical and ‘real’ behaviour in of themselves differ based on the game being played!  This makes sense if we think of rule based, unconscious processes in the same way we think about a computer program – and that once the money on the line reaches a certain level there is a ‘break’ in the loop, and we go into conscious decision making mode.

Given this view of the individual, what are some of the hypotheses could we attribute to the gap in responses between economists and non-economists in these surveys?

  1. Economists are inherently cold hearted people, and the training makes them even worse – the only hypothesis being claimed in the articles at the start.
  2. Economists trust others less following the education (I suspect this does occur – and I suspect that if it was the case we would find it quite widely across anyone who spends all their time thinking about individuals eg psychologists)
  3. Economics trains people to use rules, or break out of standard rules more quickly, than other individuals,
  4. Economists are less prone to make mistakes,
  5. After studying these games, economists view some answers as a form of image crafting, and as a result change their behaviour accordingly.
  6. Economists recognise the hypothetical situation as a game – and as a result, value it completely differently
  7. Update:  I missed one, economists may be more honest 😉

Note, outside of the first two, and some instances of the third one, all these results would lead to an economist being just as co-operative for the big issues!

The sixth one is one of my personal favourites.  In 1st year I played the prisoner’s dilemma in class, I was first up, we did a practice game where we both co-operated.  I took that as a hint, co-operated on the real game, the other guy defected – I lost!  Burn.

Now nothing is on the line in these games, except your relative position.  Furthermore, we learn how to solve these for relative position.  As a result, when it comes to playing the hypothetical game you do play it differently.

For example, in third year we had a big lab going with many games – and you would move between them every 5 mins.  We had been studying repeated games, and how there will be some co-ordination early, and then people would start defecting – however, my goal was to get the best relative position, so I defected from the start knowing that each time I was competing against different people!

When we looked at the choices later, you could see that the people I’d played against immediately started defecting as well – they were annoyed at losing.  It was a big dark streak that got larger and larger as the game went on!

Now, if there was actual money I would not have been so quick to cause a mess – not just because I could have worked to get a slightly higher “payoff” myself (albeit with a lower relative position) but also because many of these people were my friends, so I would value them getting a return as well.

In fact, our entire economics education was focused on description, admitting that people value different things, and just trying to frame behaviour from an atomistic (individual) level – as that is where choice is made!  This isn’t, and never is, to say that an individual is independent of their society and doesn’t care about them – and to be honest I find the presumption that economists, and economic students, are making an assumption that this occurs and is true to be patently absurd and insulting.  You may fundamentally disagree with methodological individualism, or economists use of it, for some reason – as I believe some of the literature pointed at tends to – but at this point we are moving into policy, thereby explicitly invoking normative views, and we are debating those.  We should have those debates, instead of trying to discredit economists before they’ve even started 😉

Now, the person at psychology today could have admitted there are a variety of reasons why economists behave differently when playing these games, and how this issue warrants further investigation (after all, there is still a lot of research to be done into how hypothetical results translate into real decision making activity – note my constant excitement about neuroeconomics and the empirical analysis in behavioural economics).  Instead, they chose to pick the hypothesis that placed economists in the worst light in order to sell their own discipline.

I don’t think you have to be an economist to see why this should be taken with a grain of salt, and why this isn’t “scientific evidence” of why you may believe that economists are douches 😉

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