Economists are different?


Jason Collins


June 6, 2012

In Robert Frank’s Passions Within Reason: The Strategic Role of the Emotions (this is another snippet pending my finding time to write a decent review), Frank describes the free riding behaviour of economists in the public goods game:

It is interesting to note that the only group for which the strong free-rider hypothesis receives minimal support in this vast experimental literature turns out to be a group of economics graduate students. In experiments essentially like the ones run by Dawes et al., Marwell and Ames discovered that economics students were significantly more likely to defect that any of the other groups they studied. This findings agrees with the finding of Kahneman et al. that commerce students are more likely than psychology students to make one-sided offers in ultimatum bargaining games.

Frank offers two explanations for these observations. The first is that economists are influenced by economic theory to act in this way, with the “most charitable” explanation being that economists treat it as little more than an IQ test. The second is that certain types of people self select into the field.

Frank suggests it is a mix of the two, and I would tend to agree. However, Frank’s observation reminded me of a class I was in a few years ago, where after learning about the strategy of the ultimatum game, we then played it. A number of people in the class became frustrated that some of the responders were not playing the equilibrium strategy of accepting the pittance they were offered. Those who play the Nash equilibrium strategy tend to suffer against many competitors, as this strategy does not always work against “irrational behaviour”.

Frank also quotes a 1986 piece from The Chronicle of Higher Education, where Robert Solow reflects on an essay by Francis Amasa Walker:

Economists, Walker argued, disregard important international differences in laws, customs, and institutions that affect economic issues. They also ignore, he said, the customs and beliefs that tie individuals to their occupations and locations and lead them to act in ways contrary to the predictions of economic theory.

Walker, Mr Solow said, could have been talking about the economists of the 1980’s.

Economists are not immune from the flawed assumption that everyone else thinks like you do.