Those lying economists

Neoliberal economics (monetarism, Austrian School, etc.) insists on teaching so much that is so demonstrably false, the rest of us have no idea whether these folks are drooling morons or pathological liars.  For years I have tended to believe in the "father forgive them for they know not what they do" explanation.  Now there is actual research that seems to show that the economics "profession" is indeed overrun with liars.

Research Says: Studying Economics Turns You Into a Liar

JORDAN WEISSMANN  DEC 18 2012

Ever hear the joke about the lying economist?
No? Well, neither have I. But we might need to come up with one.

Such is the takeaway from a working paper released in January, which I stumbled on while browsing Professor Andres Marroquin's top papers of 2012. Written by a pair of researchers from universities in Montreal and Madrid, it examined whether the study of economics made students more apt to lie for financial gain. The answer: a resounding yes.

Several past experiments have tried to test how people's personal beliefs and background influence their willingness to lie, and one, published in 2009, had yielded results suggesting that economics students were more likely to fib than those in other disciplines. Raul Lopez-Perez and Eli Spiegelman -- both economists themselves -- wanted to find out if those findings would hold up in another lab setting ... and if they did, exactly why that might be the case. Were econ students over-internalizing the lessons of the dismal science, which teaches that human being are supposed to act in their rational self interest? Or were dishonest young folks just more likely to sign up for econ classes in the first place?

To find out, Lopez-Perez and Spiegelman designed an experiment that gave its subjects every conceivable incentive to lie, and none to tell the truth -- unless, of course, they simply felt that was the moral thing to do. The test involved two participants, one we'll just call the "decision maker" and one we'll call "the other guy." Each decision maker sat in front of a computer screen that would flash either a blue or a green circle. They then had to send a message to the other guy informing them what color had appeared. If the decision maker reported that the circle was blue, he or she received 14 euros. If they reported that it was green, they received 15 euros. In other words, whenever a blue circle popped up, they were forced to choose between being honest or making an extra euro by claiming it was green. The researchers, however, did the best to make that choice simple. No matter what the decision maker reported, the other guy always received 10 euros, and never got to learn what color actually showed up on screen. All of these rules were clearly laid out for both people in the experiment.

So, let's do a quick review. By the rules of this game, it was always more profitable to report a green circle. There was no way for the decision to be generous and help the other guy get a better payday, so altruism shouldn't have been a factor. There was no way for the decision maker to get caught lying. And because the rules were transparent, the decision maker didn't even have to worry about whether the other guy might know they were lying.

Any purely rational, self-interested person would lie for the money. But people who had an emotional aversion to dishonesty might not.

The researchers ultimately ran their test on 258 students from various majors, including business, economics, the humanities, sciences, law, among others. And there was a clear gap: even though a large portion of students lied from every field, economics and business students lied a much more often than everybody else. As shown in the table below, just 22.8 percent of them honestly reported the colors of the flashing circles, even when it cost them that extra euro. More than half of humanities students, on the other hand, were honest. Same went for law students, who appeared to play against type. (The percentages are the top number the G,B row. The sample includes 257 students, because one apparently didn't share their major information).



But did studying economics make students more rationally dishonest, or were rationally dishonest students just more likely to study econ? To try and get the answer, Lopez-Perez and Spiegelman whipped out a statistical technique known as an "instrumental variable" analysis that economists frequently use to prove causation. Once the math was done, they concluded simply: "Economists lie more in our study in part because they have learned to do so."

So there you have it: Given a harmless chance to make a quick euro by telling a white lie, budding economists and corporate executives were much more likely to do it than their peers. Classics and biology lovers, on the other hand, seemed more likely to tell the truth for its own sake.

To be sure, this is just one working paper, and it focuses on just a small sliver of the students who study economics in this world. It also doesn't really seem to imply that those people are less likely to bother with the complicated moral calculus required to balance truthfulness and self-interest in real life -- only that they seem to place less inherent weight on the value of honesty.

Still, next time a company whips out a too-good-to-be-true economic forecast from a paid consultant, remember, you've been warned. more