More Evidence That Learning Economics Makes You Selfish

The perils of teaching homo-economicus

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By Adam Grant

In 1776, Adam Smith famously wrote: “It is not from the benevolence of the butcher, the brewer, or the baker, that we can expect our dinner, but from their regard to their own interest.”

Economists have run with this insight for hundreds of years, and some experts think they’ve run a bit too far. Robert Frank, an economist at Cornell, believes that his profession is squashing cooperation and generosity. And he believes he has the evidence to prove it. Consider these data points:

Less charitable giving: In the US, economics professors gave less money to charity than professors in other fields—including history, philosophy, education, psychology, sociology, anthropology, literature, physics, chemistry, and biology. More than twice as many economics professors gave zero dollars to charity than professors from the other fields.

More deception for personal gain: Economics students in Germany were more likely than students from other majors to recommend an overpriced plumber when they were paid to do it.

Greater acceptance of greed: Economics majors and students who had taken at least three economics courses were more likely than their peers to rate greed as “generally good,” “correct,” and “moral.”

Less concern for fairness: Students were given $10 and had to make a proposal about how to divide the money with a peer. If the peer accepted, they had a deal, but if the peer declined, both sides got nothing. On average, economics students proposed to keep 13% more money for themselves than students from other majors.

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In another experiment, students received money, and could either keep it or donate it to the common pool, where it would be multiplied and divided equally between all participants. On average, students contributed 49% of their money, but economics students contributed only 20%. When asked what a “fair” contribution was, the non-economists were clear: 100% of them said “half or more” (a full 25% said “all”). The economists struggled with this question. Over a third of them refused to answer it or gave unintelligible responses. The researchers wrote that the “meaning of ‘fairness’… was somewhat alien for this group.”

Hearts of Darkness

But maybe studying economics doesn’t change people. It could be self-selection: Students who already believe in self-interest are drawn to economics.

There is evidence for selection. In a study of over 28,000 students in Switzerland, 62% of economics students gave money at least once to help students in need, compared with 69% of non-economics students. These differences were already present before the students took a single economics course: students with lower giving rates were drawn to economics. As freshmen, before their first lectures, 71% of the students who chose economics contributed, compared with 75% of non-economists.

But this doesn’t rule out the possibility that studying economics pushes people further toward the selfish extreme. Along with directly learning about self-interest in the classroom, because selfish people are attracted to economics, students end up surrounded by people who believe in and act on the principle of self-interest. Extensive research shows that when people gather in groups, they develop even more extreme beliefs than where they started. Social psychologists call this group polarization. By spending time with like-minded people, economics students may become convinced that selfishness is widespread and rational―or at least that giving is rare and foolish.

To figure out whether economics education can shift people in the selfish direction, we need to track beliefs and behaviors over time—or randomly assign them to economics exposure. Here’s what the evidence shows:

1. Altruistic Values Drop Among Economics Majors

At the very beginning of their freshman year, Israeli college students who planned to study economics rated helpfulness, honesty, loyalty, and responsibility as just as important as students who were studying communications, political science, and sociology. But third-year economics students rated these values as significantly less important than first-year economics students.

2. Economics Students Stay Selfish, Even Though Their Peers Become More Cooperative

When faced with choices between cooperating and defecting, overall, 60% of economics majors defected, compared with only 39% of non-economics majors. For non-economists, 54% of freshmen and sophomores defected, while only 40% of juniors and seniors did. The economists, on the other hand, did not decrease in defection significantly over time. Roughly 70% defected across the board. Non-economists became less selfish as they matured; economists didn’t.

3. After Taking Economics, Students Become More Selfish and Expect Worse of Others

Frank and his colleagues studied college students in astronomy, economic game theory, and economic development classes. Self-interest was a fundamental assumption in the game theory class, but had little role in the economic development class. In all three classes, students answered questions about benefiting from a billing error where they received ten computers but only paid for nine and finding a lost envelope with $100. They reported how likely they would be to report the billing error and return the envelope, and predicted the odds that other people would do the same.

When the students answered these questions in September at the start of the semester, the estimates were similar across the three classes. When they answered the questions again in December at the end of the semester, Frank’s team tracked how many students decreased their estimates. After taking the game theory course, students came to expect more selfish behavior from others, and they became less willing to report the error and return the envelope themselves.

“The pernicious effects of the self-interest theory have been most disturbing,” Frank writes in Passions Within Reason. “By encouraging us to expect the worst in others it brings out the worst in us: dreading the role of the chump, we are often loath to heed our nobler instincts.”

4. Just Thinking about Economics Can Make Us Less Caring

Exposure to economic words might be enough to inhibit compassion and concern for others, even among experienced executives. In one experiment, Andy Molinsky, Joshua Margolis, and I recruited presidents, CEOs, partners, VPs, directors, and managers who supervised an average of 140 employees. We randomly assigned them to unscramble 30 sentences, with either neutral phrases like [green tree was a] or economic words like [continues economy growing our].

Then, the executives wrote letters conveying bad news to an employee who was transferred to an undesirable city and disciplining a highly competent employee for being late to meetings because she lacked a car. Independent coders rated their letters for compassion.

Executives who unscrambled sentences with economic words expressed significantly less compassion. There were two factors at play: empathy and unprofessionalism. After thinking about economics, executives felt less empathy—and even when they did empathize, they worried that expressing concern and offering help would be inappropriate.

Changing Economics and Business Education

As a business school professor, these effects worry me. Economics is taught widely in business schools, providing a foundation for courses in management, finance, and accounting. Business is now the most popular undergraduate major in the US, and it’s growing in market share. From 1997-1998 to 2007-2008, the number of bachelor’s degrees conferred in the US grew by 32 percent. In the same time period, the number of business degrees grew by roughly 45 percent. It’s true at the graduate level, too: business degrees are right behind education as the most common graduate degrees conferred in the US.

Business economics may be more devastating than other brands. When comparing students in political economics and business economics, economists found that “the willingness to contribute decreases dramatically for business students.” This may be why the late Stanford professor Hal Leavitt lamented that business education distorts students into “critters with lopsided brains, icy hearts, and shrunken souls.”

If economics can discourage prosocial behavior, what should we do about it? I’m not suggesting that we stop teaching economics. An understanding of economics has vital importance to individuals and society. Instead, I recommend three steps for reducing the odds that economics will corrupt students:

  1. Require economics majors to take courses in behavioral economics, which considers the role of “social preferences” like fairness, altruism, cooperation, and even being rationally altruistic.
  2. Require economics majors to take breadth courses in social sciences like biological anthropology, sociology, and psychology, which place substantial emphasis on how people are concerned about others, not only themselves.
  3. Within economics courses, do a better job defining the principle of self-interest around utility, which involves anything a person values—including helping others. This might mean covering evidence that natural selection can favor unselfish behavior, and that pure selfishness is less common than being “groupish” (willing to put group interests ahead of their own personal interests) and “otherish” (often motivated to help others and themselves at the same time).

Until then, we may be dooming students and society to a fate foreshadowed by Nobel Prize-winning economist and philosopher Amartya Sen. Calling economists “rational fools,” Sen observed: “The purely economic man is indeed close to being a social moron.”

Originally published here.

2016 February 3

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  • oh isn’t it obvious?

    we should immediately hook up these poor, faulty homo economicus fellows and electroshock them until they fall in line and act like everyone else!

    not until they agree that AGW is destroying the planet and that all forms of charitable giving, no matter how bad the outcomes, are not only good but necessary will we let them off.

    • Paulo Pinheiro

      No one is 100% right or wrong, most of the time!

  • Aajaxx

    I believe the findings. The more I study economics, the more I struggle to maintain my humanity. That said, there really is a lot of claptrap altruism in the public discourse that is merely manipulation and exploitation of our humanity.

  • Mateo Villalba

    More courses in behavioral economics will be great, but dont´t forget institutional economics: astynomos orga!

  • Jan de Jonge

    Not only is economics a dismal science also its practitioners are people with whom much is wrong. No social science as economics and no social scientists as economists are so continuous blamed for their miserable moral by non-economists. As if they are unbelievers; still not saved by the true spirit that behavioral economists, social psychologists and many more from the other social sciences posses in abundance. Let the poor economists learn what ‘otherish’ and ‘groupish’ is, so that they may be saved and go to heaven like all other social scientists.

  • Ralph Byrns

    About 10 years ago, research by two of my thesis advisees indicated that economics majors are more “economically rational”, per the Kahneman-Tversky questionnaire, than other students. In roughly 2005 , Doug Sue, interviewed Daniel Kahneman by phone. Kahneman confirmed that “failures of economic ‘rationality'” reflected in responses to questionnaires [the K-T questions] and documented by Kahneman and Tversky were answers from students in Intro to Psychology classes taught by Kahneman and/or Tversky at Stanford, Toronto, Princeton, Hebrew University, or the University of California at Berkeley. The K-T undergraduates were paid volunteers. Sue and I repeated their experiments using the K-T questionnaires at the University of North Carolina, solicitng responses from 100 upper division students — 33 upper-division economics majors, 33 from math and science, and 34 from liberal arts. We expected the math-science majors to outperform the liberal arts majors. We also expected the economics majors to outperform the liberal arts majors, at roughly the same level as by the math-science majors. We were wrong. The liberal arts and math-science majors performed at about the same levels as those in the original K-T expariments, and, over all, they were on average “less rational” than the economics majors. We speculated that this might have been a result of either self selection into economics, or absorbing economic theory by majoring. A year later Alexandra Samet, another advisee, performed a similar experiment, based on responses from 50 economics majors and 50 students in the UNC College of Business. Her findings were that “economic rationality” was not enhanced by the numbers of courses taken, and that economics majors outperformed the business administration majors. Cuts in research funding for undergraduates prevented extending these lines of inquiry. However, for the purposes of this blog, the separate studies by Sue and by Samet indicate that economics majors may self select based on a knack for economic reasoning. Samet’s research also concluded, weakly, that males were more economically rational, on average, than females — unless the females were economics majors. The female economics majors outperformed all other participants. 🙂 Perhaps small sample error, but I still wonder. I wish I could communicate something more definitive, but alas. I’ve retired.

    • Albert Cloete

      I’m curious what “economically rational” means here. I suspect “economically rational” and “selfish” or “anti-social” might mean or amount to the same thing here.

      I’d be cautious to just label economic students as selfish in general. These studies all take the form of games. Economics might teach you the skills needed to outplay other players in these games. It could put them into a more competitive mindset when asked these types of questions.

      I wouldn’t necessarily say that it would translate into more selfish behavior in the real word.

      • Ralph Byrns

        “Selfish” and “anti-social?” I really don’t think “rationality” implies sociopathic.

        However, you may well be right that the results from my advisees’ theses suggest that economics majors are not necessarily “selfish”, but instead that they might merely be “better” than average at games that require identifying answers consistent with “economic rationality”.

        Economic rationality is usually framed as
        (1) rationally self-interested [but not necessarily narrowly so],
        (2) pleasure-seeking (pain-avoiding).
        (3) positive time rates of discount (a preference for gratification sooner rather than than later)..
        (4) forward-looking and time consistent.
        (5) consistent and at least moderately “risk averse” behavior.

        RE: #1: Self-interest may be manifested in ‘charitable’ or humanitarian activities that yield a “warm glow” feeling, or in basking in the success of one’s children — or relatives or friends — or favorite athletic teams. (A “selfish gene” effect? Evolutionary biology?)

        RE #2. Masochists might seem an exception, but whatever floats one’s boat.

        Re #3. An explanation for the existence of interest rates. Dessert tomorrow tends to be less desired than dessert today. 🙂

        RE #4: An explanation for materialistic and psychic payoffs from education.

        RE #5: Trade-offs involving risks and rewards. People tend to expect a net positive payoff when occupations, for example, are riskier, or less pleasant.

        The bases for this apparent superiority relative to liberal arts majors, or STEM or standard “business” majors? Unknown. Another question: Was majoring in economics a result of inherently superior economic rationality, or was superior “rationality” merely a reflection of formal educational conditioning — the numbers of econ courses taken? One hint: A 2006 thesis by another of my honors students found that performance by econ majors on the K-T questionnaire was unaffected by the number of econ courses taken, but the result was not especially robust.

        Across four decades of being a prof (1971-2013) I’ve tried to emphasize to students that dying with the most toys means that you lost, and that success in life means that humankind gained because you were here. Perhaps a major measure of success is whether your children and neighbors love you.

        But enough.

        • Justanothergoldbug

          Or just more honest

  • Paul Monaghan

    Great article.

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