Is Economics the Problem?

For a class, I recently read “The Psychological Consequences of Money,” a 2006 article in Science by Kathleen Vohs, Nicole Mead, and Miranda Goode. It describes nine experiments testing how reminding people of money leads them to behave differently — in ways that we should not be proud of. You may have heard of these experiments.

In Experiment 5, participants first played Monopoly, after which the game was cleared except for a large or a small amount of play money; then they were asked to imagine a future with abundant finances or with strained finances (there was also a control group); then someone walked into the room and dropped a box full of pencils. People who saw more money and imagined having a lot of money picked up fewer pencils. In Experiment 7, participants saw a screensaver with currency symbols floating underwater or fish swimming underwater; then they were asked to move two chairs together for a conversation with another person. People who saw the currency symbols placed the chairs further apart than people who saw fish.

The conclusion is that simply thinking about money — even unconsciously — makes people more self-sufficient, more socially insensitive, and less cooperative.

Now, this caught my attention because (a) I often think about money, and large sums of money (it’s kind of unavoidable when you write about the financial crisis or the national debt) and (b) I tend toward being self-sufficient and not especially given to cooperation. I’m the kind of person who, in school, prefers to do assignments by myself, not so I can stand out, but simply because I find it more efficient to avoid interaction costs. I try to overcome this by being generally helpful to others, but if there’s something I have to do, I often prefer to do it alone.

It also struck a chord with something I’ve written about before: my suspicion that studying a little bit of economics makes you more self-interested and less interested in fairness. Robert Frank, Thomas Gilovich, and Dennis Regan wrote two papers on this back in the 1990s that most of the professional economists out there already know. In one of their experiments, they asked undergraduates at the beginning and end of the semester several questions such as whether or not they would return $100 lost by a stranger at the end of the semester. They found that the proportion of students who gave more dishonest answers at the end of the semester than at the beginning was highest for students who took introductory micro from the mainstream economist, lower for students who took introductory micro from the developmental economist, and lowest for students who took introductory astronomy.

If there’s an effect here, I don’t think the mechanism is that economics makes you a bad person. Instead, it changes your expectations about what the rest of the world is like. If you are an altruistic person and someone teaches you that (a) most people are self-interested and (b) the world would be better if everyone behaved in a self-interested way, that is likely to make you behave in a less altruistic way.

But back to the original study: Money in general and large amounts of money in particular have become more accepted parts of general American culture than they were when I was a child. It seems quite plausible that this is also changing the way that Americans behave and making the ideology of individual autonomy even stronger than it already was. Which I don’t think is such a good thing.


Originally published at The Baseline Scenario and reproduced here with permission.