Wednesday, January 21, 2009

Economic indoctrination

One of Ariel Rubinstein's dilemmas was depicted in the Layoff Survey where respondents (mainly students) were asked how many people to layoff in a hypothetical situation. He found that Econ students were more likely to respond to the profit maximizing solution (and hence laying off more) than either Philosophy or MBA students. He concludes:

The interpretation of the results cannot be separated from one’s personal views regarding the behavior of economic agents in such a situation. If you believe that the managers of a company are obligated morally or legally to maximize profits, then you should probably praise economics for how well it indoctrinates its students and be disappointed that so many of them still do not maximize profits. On the other hand, if you approach the results with the belief that managers should also take into account the welfare of the workers, particularly when the economy is in recession and unemployment is high, then you probably feel uncomfortable with the results.

I think that this is one of the problems with using students. It is possible that once the students are out of school the effects of indoctrination might be ameliorated. Having come from the economics department from Rochester (a very free market school) and having been out of economics for almost 10 years I have no problems entertaining the following seriously (whereas I would have not in the first few years out of school):
1. Nationalization of the financial industry
2. Health care is a right, not a privilege (Bumper Sticker)
3. Living wages
4. Free trade is over rated

It is also possible that the Econ students were not responding truthfully but responding in a way that they think the questioner would want them to respond. For instance, they may have viewed the survey as a "test" of how well they had learned economics. This may be an instance of where asking a question might be distorting.

Bottom line: I'm not as worried about indoctrination as Prof. Rubinstein as long as Econ students don't remain in academia. This is when they move from being indoctrinated to being idealogues.

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