This study tells us nothing about whether studying economics make students less ethical

Does studying economics make students less ethical? The research question is interesting and potentially important (and I've written about similar questions before - see here and here). Answering it, though, is pretty challenging. Simply comparing some measure of ethics between students that have studied economics and students have not studied economics is no good, because perhaps less ethical students choose to study economics. That would create a problem of selection bias. Similarly, comparing some students who chose to do economics early in their degree programme, and students who chose to leave economics for later, faces the same problem.

So, I was quite disappointed when I read this book chapter by Christian Mastilak (Xavier University) and co-authors (ungated earlier version here). Promisingly, they conduct a lab experiment with business school students, some of whom have studied microeconomics already, and others that haven't, and test how ethical their choices are across a few experiment tasks. They find that:

...participants with exposure to agency theory assumptions through either an experimental manipulation invoking a competitive, wealth-maximizing frame consistent with common agency theory or prior microeconomics coursework acted more unethically than participants who had neither exposure to agency theory.

By "agency theory" here, Mastilak et al. are really referring to economic theory more generally (and in fact that's how they refer to it in the ungated version of the paper). They started their experiment by having participants play a prisoners' dilemma game. The game had two different framings, and each participant saw only one framing: (1) as a competition between two competing firms, with an emphasis on each firm's individual payoff; or (2) as a collaboration between two NGOs, with an emphasis on the joint payoff to society as a whole.

They then went on to have their participants engage in other tasks, a few of which were used to evaluate ethical behaviour (or otherwise). They find no differences between participants on two of the tasks, but they do find statistically significant differences on one task, that involves participants overstating a budget request, where they would receive a payout that enriches them.

Mastilak et al. compare the budget request between participants who were exposed to the competitive or cooperative framing of the prisoners' dilemma, and find that participants exposed to the competitive framing made larger budget requests (thereby acting less ethically). However, comparing participants who had completed prior economics with those that had not, there were no statistically significant differences. Now, see if you can follow these bits of the paper:

Panel B reports a two-way ANOVA. The effect of the experimental condition (frame) is significant (p = 0.011).

Initially, it appears there is no effect of prior microeconomics coursework as the effect of prior microeconomics coursework is not significant (p = 0.193)... coursework. Tests of simple main effects are reported in Table 1, Panel C. For participants who had taken microeconomics, the agency frame condition had no effect (p = 0.201). For participants who had not taken microeconomics, the agency frame condition had a significant effect (p = 0.026).

We interpret our tests of simple effects as indicating that either agency frame manipulation or prior economics coursework is sufficient to increase unethical behavior...

Wait - read that last bit again. They interpret their results as indicating that "either agency frame manipulation or prior economics coursework" increases unethical behaviour. And yet, one paragraph earlier, they clearly say that "the effect of prior microeconomics coursework is not significant", and that the effect of framing on participants who had taken microeconomics was also not statistically significant.

And even their results of the agency frame having a significant effect for those who had not taken microeconomics is shaky, because their whole sample size of participants who had not taken microeconomics was 11 students. And because microeconomics is compulsory for business students, those 11 students are students who had left economics until later in their degree programme, so can be assumed to be meaningfully different from the other students (self-selection bias).

Who peer reviewed this book chapter? The headline result is basically not supported by the analysis. The effect of the prisoners' dilemma framing on subsequent unethical choices is interesting (although I have some issues with the particular way they conducted the framing), but it tells us nothing about whether studying economics affects ethical behaviour.

Experimental studies can often help us to better understand relationships in a controlled environment. However, studies like this one do not help at all.

Read more:

• Does education in economics make politicians corrupt?
• The impact of business and economics education on moral competence