Frank has looked at the patterns of giving to charity, personal gain, and the acceptance of greed and concern for fairness amongst economics professors and students in the US, Germany and Switzerland. What he found is disturbing:
- Economics professors in the US were more than twice as likely to give nothing to charity than were professors in other fields,
- Economics students in Germany were more likely than other students to recommend a corrupt tradesperson when they had been paid to do so.
- Economics majors and students were more likely than their peers to rate “greed” as “generally good,” “correct,” and “moral.”
- Economics students were significantly less likely than other students to understand the concept of fairness.
No matter whether the students are inculcated or predisposed the phenomenon is troubling.
Adam Smith and Charles Darwin
Well over 200 years ago Adam Smith (the so-called “father of economics”) wrote that “it is not from the benevolence of the butcher, the brewer, or the baker, that we can expect our dinner, but by their regard for their own interest.” In other words, according to this foundational economic theory, we are all selfish at heart and look out for our own best interests ahead of others. Smith’s theory was that by doing so the good of all would be provided for.
One hundred years later Smith was followed by the theories of Charles Darwin which seemed to be suggesting a similar theme: the “survival of the fittest.”
Darwin, at least (I’m uncertain of Smith) was misquoted and mis-interpreted. Darwin, for instance, was troubled by2, and pondered, the role of altruism in evolution and came to the conclusion that altruistic humans would not be successful at passing on their genetic material.
However, another 100 years later, George Price showed, conclusively, that Darwin’s conclusion was in error.3 Price showed that evolution is, in fact, reliant upon altruistic people and that groups in which altruism is prevalent tend to prevail over groups in which selfishness is prevalent.
What does this mean for the study of economics? Much of western economics is still premised on Smith’s self-interest model. Could this be because the model acts in the same way as a self-fulfilling prophesy – a perpetual cycle of fallacy?
A Model to be Challenged
If students of economics are inclined towards greed, corruption, and unfairness, then they are more likely to find that their cohort will share those values and cannot but help but perpetuate Smith’s self-interest claim. If, on the other hand, economics students are taught the self-interest model of Smith, then it is understandable that they will incorporate the values of greed, unfairness and non-compassion within their own moral framework.
This suggests that Smith’s basic theory has little chance of being challenged from within the economics profession.
But, challenge it we must. Since the 1980s the notion of self-interest has not just been a feature of the prevailing economic theory – it has become the predominant idea and possibly even the goal of economic activity.
Self-interest has led to gross inequalities between and within nations, a disregard for the carrying capacity of the earth, financial crises, and a rapid increase in CO2 emissions.
And, it is all based on a flawed theory.
1. Adam Grant, Does Studying Economics Breed Greed? Psychology Today, 2013.
2. Darwin founded a Friendly Society in Downe (England) that looked after the welfare of impoverished agricultural workers. Cited in Stefan Klein, Survival of the Nicest, Scribe, Melbourne, London, 2014, p 17.
3. Klein, p 138