Does Economics Education Teach Students to Trust?

by Timothy Taylor, Conversable Economist

Last March, I discusses some of the studies on the question, “Does Economics Make You a Bad Person?“ (March 31, 2014). In the Spring 2014 issue of the American Economist, Bryan C. McCannon offers some additional evidence on the question in:

“Do Economists Play Well With Others? Experimental Evidence on the Relationship between Economics Education and Pro Social Behavior” (59:1, pp. 27-33).

The journal is not freely available on-line, although many readers will have access through a library subscription.

The guts of the paper is an experiment with 147 students “conducted with undergraduate students at a small, private university in upstate New York.” McCarron teaches at St. Bonaventure University, so you can draw your own conclusions about the identity of the school. Some of the students had already taken “a significant amount of coursework in economics,” some are planning to study economics but haven’t yet taken economics courses, and some have neither had economics classes nor are planning to take them.

The students participated in a “trust game,” which has two players. The first player is given a certain amount of money–in this study, $5. The first player decides how much to give to the second player. But here’s a twist: the amount given to the second player is tripled. Then, the second player decides whether to give some money back to the first player. The game ends there. The students played the game five times, but with a random and changing selection of opponents each time

Clearly, if the first player fully trusts the second one, the first player will give the full $5 to the second player. The amount will be tripled in transit, and the second player will be able to return the full $5, plus more, to the first player. However, a first player who is less trusting may give less than the full $5, or nothing at all, to the second player, because after all, the second player may just hold on to all the money and not return any of it. Thus, the question is whether students who have taken a lot of economic classes tend to be more or less trusting than other groups.

A typical finding in a trust game is that the first player gives half the money to the second player. The second player then returns about 80% of the money invested, and keeps the rest. Thus, trust often does not pay off for the first player–which helps to explain why they venture to pass along only half of the original sum.

In this study, it turns out that when taking the role of the first player, “[e]ach class a student takes contributes approximately ten cents more.” When taking the role of the second player, “[t]aking more economics courses is associated with escalated rates of reciprocation. Approximately fifteen more cents is given back if given all five dollars, which represents a 3.5% increase.” McCarron also gave the participants an attitudinal survey before playing the game, and when analyzing the survey results together with the game results, he argues that those who are selecting themselves into economics classes are more likely to practice trust and reciprocity.

This study follows several common patterns in this literature. The group being studied is a relatively small group of students at one institution, so there is a reasonable question about whether the results would generalize to a broader population. The engine of inquiry is a structured “laboratory experiment,” in this case the trust game, and so there is a reasonable question about whether the motivations revealed in such studies would show up in other behaviors and contexts.

But although the results of these kinds of studies shouldn’t be oversold, it’s not shocking to me to find that those who study economics may be more likely to look at a trust game and see it as an opportunity for a cooperative exchange that can benefit both parties. Indeed, economists may well be more prone than non-economists to seeing the world as a place full of voluntarily agreed transactions that can represent a win for both parties.