There are numerous stereotypes about economists. Two are common. The first is that all we think about and study is money. The second is that economists are more selfish than the average person.
Both stereotypes are wrong. My wife, who is not herself an economist but has been married to one for almost forty-one years, has a great answer to the first claim. When people find out that I’m an economist and then say, “Oh, he must study money,” she answers, “No, he studies human behavior.”
But I want to focus on the second claim because I think it’s the opposite of the truth. My observation is that the average economist is less selfish than the average person and that there’s a good reason for it: the study of economics causes us to think about consequences beyond the ones that are obvious. Moreover, the scholarly literature that some people think shows that students who learn economics become selfish doesn’t actually show that.
These are the opening 3 paragraphs of my latest Hoover article, “Economics Isn’t Selfish,” Defining Ideas, May 30, 2024.
Later in the piece, I discuss a controversy that broke out a few years ago about some academic work that one of the co-authors claimed, incorrectly, demonstrated that economics students are more selfish than other students.
Read the whole thing.
READER COMMENTS
Richard W Fulmer
May 31 2024 at 3:07pm
But if we were to stop and consider all the people who would be affected by every proposed policy, we would reject over 95% of them, thus preventing government from doing “something” in response to the latest crisis. Therefore, economists are selfish because, as we were taught in school, government needs to do something. Worse, rejecting a Senator’s or Representative’s proposal would make them feel bad about themselves, and, as we were taught in school, self-esteem is far more important than getting the right answer.
Monte
May 31 2024 at 5:58pm
You write that in a discussion with a “some-what left wing” economist friend of yours that you agree with him in principle that SS benefits should be means-tested. How does this square with your earlier comment that “While I do think that future budget deficits will push us towards some version of means testing, I can’t agree that it’s awesome. It just may be less bad than what [Caplan] accurately characterizes as “taking from Peter to pay Peter.”?
(Problems with Means Testing, David Henderson, 2010, Econlog)
There are myriad issues associated with means-testing SS benefits. Chief among them, IMO, is the fairness issue, which amounts to breaking faith with the American worker. Besides, the costs of implementing a means-test (erosion of public support, disincentives for saving, administrative complexity, potential for fraud and abuse, and other unintended consequences) would likely exceed any assumed benefits .
David Henderson
May 31 2024 at 6:36pm
You write:
I said it’s not awesome. I still think it’s not awesome. It’s a good idea to deal with a bad hand we’ve been dealt. It would have been much easier to deal with the problem without means-testing when I wrote in 2010. Now 14 years of government not dealing with it has narrowed our choices.
My first choice is to gradually raise the age further and use CPI -1 percentage point to increase annual benefits.
But I’m curious: what do you advocate?
Monte
May 31 2024 at 8:22pm
Well, one alternative involves “limiting benefits based not on individuals’ incomes in retirement, but rather on their lifetime earnings.” Among other things, this voids the fairness issue and eliminates disincentives to save. (see Means Testing and Its Limits, Andrew G. Biggs, National Affairs, no. 59, Spring 2024).
Other ideas suggested in a 2012 issue brief by the American Society of Actuaries:
I guess this strikes a nerve with me, as my wife and I are retired and living strictly on our savings such that means-testing for us (as it is currently being discussed) would mean receiving no SS benefit at all.
Hopefully, that doesn’t make us more selfish than the average person.
David Seltzer
May 31 2024 at 6:44pm
David: Provocative post. I’m mulling the difference between self-interest and selfishness. It seems selfishness is met with disproval while self-interest drives the invisible hand. Yet some acts of self-interest are morally suspect. A merchant would strenuously object to shop-lifters pursuing their self-interest in his establishment.
john hare
Jun 1 2024 at 5:07am
I’m not an economist, but take some of the thinking into account. Though much of it seems to emulate that elusive quality referred to as “common sense”.
We have been doing some of our own blockwork recently as the mason increased prices beyond what we could build into some projects. $5.00 a block and up labor. In central Florida that is very high for residential. One of our other subs referred a mason that has been doing work for track builders. (Make up in volume for extreme low price)
Talking to the new guy, I offered $2.00 a block and he was happy to accept. Apparently, his crew is doing work for $1.15 a block in subdivisions. I told him I did not want anyone on my job at that price. My reason is that I have seen several cycles of contractors holding subs so low that they cannot pay their people, insurance, taxes, do good workmanship, and still make a profit. The result is that many do shoddy work in the interval before they go broke owing the IRS, insurance companies, and employees money they don’t have. Then the contractor moves on to the next sub that they can use up.
In rejecting the $1.15 price in favor of $2.00, am I thinking like an economist, of my self interest, or just being a short sighted sucker???
Jon Murphy
Jun 1 2024 at 8:41am
Good stuff. This is why I start each class I teach (regardless of level) with a lecture on justice and morality in economics (the summary version is here). I think that, without a foundation of philosophy, one can easily slip into “man-of-system” thinking and reduce the “propensity to truck and to barter, and the manifold variations in structure that this relationship can take” (to use Buchanan’s description of economics) into mere numerical aggregates, devoid of any worth.
Good economics teaches us that, as you point out David, we must consider other people when we discuss costs and benefits. In a good economic system, we must learn to serve one another if we are to get others to do as we will.
steve
Jun 2 2024 at 12:08pm
I dont think the evidence is good that studying econ makes you selfish but there are a fair number of game-studies that have been done showing that students going into econ are more selfish ie they play the prisoners dilemma game the way you would predict and not the way people actually play it. But then, they are 18 and 19 y/o and I suspect as they both mature and study economics some of that wears away and the variation is so large between individuals its not an especially useful piece of knowledge in dealing with any individual.
The fact that this still lingers suggests to me that it was probably true in the past. Doctors had a reputation of being snotty and all-knowing in the past and a lot of them did live down to the stereotype. (There were many others who were very giving and generous of their time, money and efforts but you always get judged by your worst people.) However, we actively get rid of those types now so they are much less common.
Steve
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