Does studying economics make you more selfish?

When economics students learn about what makes fellow humans tick it affects the way they treat others. Not necessarily in a good way, as Tom Stafford explains.

Studying human behaviour can be like a dog trying to catch its own tail. As we learn more about ourselves, our new beliefs change how we behave. Research on economics students showed this in action: textbooks describing facts and theories about human behaviour can affect the people studying them.

Economic models are often based on an imaginary character called the rational actor, who, with no messy and complex inner world, relentlessly pursues a set of desires ranked according to the costs and benefits. Rational actors help create simple models of economies and societies. According to rational choice theory, some of the predictions governing these hypothetical worlds are common sense: people should prefer more to less, firms should only do things that make a profit and, if the price is right, you should be prepared to give up anything you own.

Another tool used to help us understand our motivations and actions is game theory, which examines how you make choices when their outcomes are affected by the choices of others. To determine which of a number of options to go for, you need a theory about what the other person will do (and your theory needs to encompass the other person’s theory about what you will do, and so on). Rational actor theory says other players in the game all want the best outcome for themselves, and that they will assume the same about you.

The most famous game in game theory is the “prisoner’s dilemma”, in which you are one of a pair of criminals arrested and held in separate cells. The police make you this offer: you can inform on your partner, in which case you either get off scot free (if your partner keeps quiet), or you both get a few years in prison (if he informs on you too). Alternatively you can keep quiet, in which case you either get a few years (if your partner also keeps quiet), or you get a long sentence (if he informs on you, leading to him getting off scot free). Your partner, of course, faces exactly the same choice.

If you’re a rational actor, it’s an easy decision. You should inform on your partner in crime because if he keeps quiet, you go free, and if he informs on you, both of you go to prison, but the sentence will be either the same length or shorter than if you keep quiet.

Weirdly, and thankfully, this isn’t what happens if you ask real people to play the prisoner’s dilemma. Around the world, in most societies, most people maintain the criminals’ pact of silence. The exceptions who opt to act solely in their own interests are known in economics as “free riders” – individuals who take benefits without paying costs.

Self(ish)-selecting group

The prisoner’s dilemma is a theoretical tool, but there are plenty of parallel choices – and free riders – in the real world. People who are always late for appointments with others don’t have to hurry or wait for others. Some use roads and hospitals without paying their taxes. There are lots of interesting reasons why most of us turn up on time and don’t avoid paying taxes, even though these might be the selfish “rational” choices according to most economic models.

Crucially, rational actor theory appears more useful for predicting the actions of certain groups of people. One group who have been found to free ride more than others in repeated studies is people who have studied economics. In a study published in 1993, Robert Frank and colleagues from Cornell University, in Ithaca, New York State, tested this idea with a version of the prisoner’s dilemma game. Economics students “informed on” other players 60% of the time, while those studying other subjects did so 39% of the time. Men have previously been found to be more self-interested in such tests, and more men study economics than women. However even after controlling for this sex difference, Frank found economics students were 17% more likely to take the selfish route when playing the prisoner’s dilemma.

In good news for educators everywhere, the team found that the longer students had been at university, the higher their rates of cooperation. In other words, higher education (or simple growing up), seemed to make people more likely to put their faith in human co-operation. The economists again proved to be the exception. For them extra years of study did nothing to undermine their selfish rationality.

Frank’s group then went on to carry out surveys on whether students would return money they had found or report being undercharged, both at the start and end of their courses. Economics students were more likely to see themselves and others as more self-interested following their studies than a control group studying astronomy. This was especially true among those studying under a tutor who taught game theory and focused on notions of survival imperatives militating against co-operation.

Subsequent work has questioned these findings, suggesting that selfish people are just more likely to study economics, and that Frank’s surveys and games tell us little about real-world moral behaviour. It is true that what individuals do in the highly artificial situation of being presented with the prisoner’s dilemma doesn’t necessarily tell us how they will behave in more complex real-world situations.

In related work, Eric Schwitzgebel has shown that students and teachers of ethical philosophy don’t seem to behave more ethically when their behaviour is assessed using a range of real-world variables. Perhaps, says Schwitzgebel, we shouldn’t be surprised that economics students who have been taught about the prisoner’s dilemma, act in line with what they’ve been taught when tested in a classroom. Again, this is a long way from showing any influence on real world behaviour, some argue.

The lessons of what people do in tests and games are limited because of the additional complexities involved in real-world moral choices with real and important consequences. Yet I hesitate to dismiss the results of these experiments. We shouldn’t leap to conclusions based on the few simple experiments that have been done, but if we tell students that it makes sense to see the world through the eyes of the selfish rational actor, my suspicion is that they are more likely to do so.

Multiple factors influence our behaviour, of which formal education is just one. Economics and economic opinions are also prominent throughout the news media, for instance. But what the experiments above demonstrate, in one small way at least, is that what we are taught about human behaviour can alter it.

This is my column from BBC Future last week. You can see the original here. Thanks to Eric for some references and comments on this topic.