More Evidence that Exposure to Economic Theory Breeds Greed

I have written here and elsewhere -- including in academic journals with Fabrizio Ferraro and Jeff Pfeffer -- about research and theory suggesting that, when people are exposed to economic theory and assumptions, they tend to become more selfish.  This research, as with much evidence in the behavioral science, shows that exposure to ideas or even little "primes" (such as one study that simply exposed students to backpack versus a briefcase) can have surprisingly big effects on whether people are selfish or generous.  In this vein, an article in the December 2011 edition of the Academy of Management Learning & Education journal by Long Wang, Deepak Malhotra, and Keith Murnighan reports three studies that add to this troubling pile of evidence:

In the first study, students played something called "The Dictator Game," where they are given complete control over how ten dollars were distributed between themselves and a counterpart in another room.   The researchers found that students who studied economics were significantly more greedy than those who studied education, with the average economics student taking about a $1.25 more for him or herself (($7.76 vs. $6.50). 

A second study compared the attitudes of students who had taken two or fewer economics courses to those who had taken three or more classes, and found that those students who had taken more economics classes had more positive views of their own greedy behavior and of morality of greed in general.

A third study compared students who were simply exposed to short statements from economists about the virtues of self-interested behavior versus statements from economists about the negative effects of self-interest.  Then they were given a questionnaire with five statements about the benefits of greed. The researchers found that simply being exposed to these short arguments packed a wallop:  People who read about the benefits of self-interest (although randomly assigned to the condition) were more likely portray greed as good, correct, and moral.

Taken together, these studies, along with a pile of research before them, suggests the assumptions we are exposed to in life -- and those we are attracted to as well -- can have a big impact on how we view and treat others.  They don't show that economics is inherently evil, but do suggest that embracing (or just being exposed to) one of the core assumptions in the field -- that people are inherently self-interested -- can create a self-fulfilling prophecy, which can make you think and act like a more greedy person.  

Looking out for yourself is necessary in life. We all need to money, we have others we need to take care of, and striving to do great individual work can benefit those around us in many ways.  But studies like this one  are instructive.  They remind us that being around others who are greedy and selfish can cause us to be infected with the same behaviors and beliefs, that just being around money and thinking about it can lead us to be less likely to help others (and less likely to ask for help), and that when we are feeling competitive and wanting more and more it is a good time to stop ask and ourselves: Do I have enough for myself? Do I really need more?

Comments

[John J. Walters]

That sounds like a study worth finding.

You bring up a good point about the long term. Selfishness takes on a very different meaning when you shift from a short term to a long term perspective.

Example: cheating on your wife.

If you are "selfish" in the normally accepted sense of the word, you don't care about her and so you will cheat. The short term thrill outweighs all, and you have no regard for the feelings of others.

If you are selfish by my definition however, you will recognize that potentially throwing away years and years of love and support for one night of passion simply isn't in your best interests long term. So you won't do it, in spite of temptation.

Really, it comes down to having the ability to unabashedly seek out your own happiness. Your true happiness.

It is my firm belief that very few people are truly happy by being greedy. This is why, as people get more money, they tend to donate more of it, care more about righting social wrongs, etc. We have a built in need for generosity that works in concert with our self-interest.

Of course, we can't forget about the hierarchy of needs. It is a rare individual indeed who can worry about others while he can't make rent.

We need to start appreciating all aspects of selfishness, I think. We should (and often do) respect the man who pulls himself up by his onesies and provides for a family.

We also need to stop persecuting him if he gets so successful that we would call him "rich." And we need to recognize that it is not a different motivator that causes him to be generous once he can afford to be. He has simply moved on to another level in the pyramid, but is still acting out of self-interest.

I am going off-topic here, but this happens to be a subject that means something to me, although I've never tried to write about it before. Sorry.

[Bob Sutton]

John,

To build on the interesting perspective in your note, I think it is important to look at perspectives on self-interest, and see how they change when you take a longer-term time perspective. So there are many cases when being "greedy" in the short-term gets you less in the long term because trust is so important to long term relationships. In addition, when I reviewed some of this literature some years back, there was an interesting study -- I have to find it -- that shows people who are more individualistic and self-interested were MORE cooperative than people who cooperative and unselfish when the reward system encouraged cooperation. It is sort of a cool paradox because the "naturally" greedy people helped each other more when it was the best path to a solo reward. I am not overly interested in Ayn Rand and the glories of self-interest, but this research is cool because it shows that self-interest may lead to more cooperation when the incentives are right, which is kind of cool.

[John J. Walters]

This is an interesting point.

I think Ayn Rand is the lightning rod for most of the criticism of the "glorification of greed." Well, maybe her and Gordon Gecko, but that movie is so old, kids my age (24) haven't seen it or heard of it.

The thing is, even Rand said: "Man's happiness is an end unto itself." She didn't say "Man's profit is an end unto itself."

People who read her work and think that it's all about how being selfish is great only get half of what she meant. Let's remember, here, that Atlas Shrugged is also a love story -- although the main characters unabashedly admitted that the reason they loved each other was because they made each other happy.

In short: the love was selfish. But that in no way diminished it.

Selfishly searching for happiness has a bad ring to it only because we have negative associations with the word "selfish." But we need to admit that we're (almost) all selfish, first and foremost (especially when the chips are down).

We can perceive that as a weakness or we can turn it into a strength.

Example: Selfishness as a weakness.

I work my ass off to become "the 1%" and then I sit on my golden throne and laugh about how much I have. And I die alone, or perhaps surrounded by phonies and suck-ups.

Example: selfishness as strength.

I work my ass off to become one of the "1%." And, seeking my own happiness, I am generous with my money and my time towards friends and members of the community that I care about. I die surrounded by loved ones.

The solution is not to stop studying Rand because it makes people greedy. The solution is to study Rand properly: as a love story.

[Bob Sutton]

All, thanks for the comments. I would not say I am arguing for socialism. My personal view is that a less selfish form of capitalism is often more effective in the long run. As an example, there is quite good evidence that when companies pay high, but there are smaller gaps between the best and worst paid people -- be it baseball teams or top management teams -- that performance is higher. I think throwing in the word "socialism" makes this political in a way that obscures the point. I am arguing for a more compassionate and constructive form of capitalism, the kind I've seen from leaders Bill Cambell at Intuit, David Kelley at IDEO, and Ed Catmull at Pixar. Those guys all have made a lot money, and in part, by not being as greedy as many of their counterparts.

[Neil from Ohio]

This explains why liberals are working so hard to dumb down the American educational system. When students are exposed to the truth, then they learn that socialism does not work.

[robert cenek]

Probably explains why I had this bad habit of engaging the marxists in the student union in some friendly debate on the viability of dialetical materialism. :))

[Randy Bosch]

Bob, Thanks for another provocative post! How do you propose that teaching might be reformed to help innoculate students against the infection of greed, born of human nature before such folks are let loose to "practice"? Every field of endeavor teaches core assumptions and, hopefully, ethics, but economics is the current provider of incredible and continuing examples of self-interest grossly crossing the line of societal acceptance. Nassem Nicholas Taleb hits hard at the "problems of academic economists" set lose into "real life" - perhaps some help there? Thanks, Bob.