Raising Asocial Economists?

If any economist both provoked and impressed the audience of his or her peers, then it was Ariel Rubinstein during his Presidential Address at the Annual Conference of ESEM (Econometric Society) last year. In Madrid, it was hot outside, and the newly elected president brought the heat also into the plenary session.

Rubinstein spoke on Dilemmas of An Economic Theorist, where he basically an extended his previous thoughts based on survey study in A Skeptic’s Comment on the Study of Economics.

He says to be skeptical on the mission of economic theory. In short, he finds that economics is teaching people to be asocial, or it at least attracts asocial individuals. Better or worse, economics is a tool in hands of policy makers and ideologues to whom Rubinstein is not particularly attracted.

I think Rubinstein is empirically correct, but theoretically wrong. Strange for theorist – normally I would assume this to be reverse.
It is indeed plausible that most students and graduates of economics favor pro-market solutions comparing to solutions with more equalizing outcomes. My intuition goes in the same direction as his empirical study. Yet, is this a sign of broken informal institutions, a destruction of moral/social obligations?

Well, consider the following competing explanations:

1. Vicious self-selection I. Economists are asocial. Their knowledge on market vs. state efficiency and distribution effects is not significantly different from common knowledge.
2. Vicious self-selection II. Economists are asocial. Their knowledge is different. But superior economic knowledge shifts not distribution of policy preferences.
3. Corrected bias. Economists are social. However, policy recommendations given by superior economic knowledge are different from policy recommendations of those completely ignorant. Economic knowledge stresses decentralized solutions of market problems, unintended consequences of social policy, and the possibility of entrepreneurship. It is also able to analyze formally government failures.
4. Reaffirmed self-selection. Economists are asocial, and have the same implication as in Case 3.

Hypothesis 1 implies question – why study Economics? So, proponents of ”asocial economist” hypothesis may resort to Hypotheses 2 or 4. But why not Hypothesis 3?

To me, Rubinstein’s puzzle is nothing special. By studying economics, as, among others, Bryan Caplan proves, we correct our prejudices on malign effects of markets. Thus, we are naturally driven to favor more pro-market solutions. In our objective function, market is relatively less costly to the government. We face a substitution effect – no wonder we consume more markets (efficient outcomes) and less government (egalitarian outcomes). This implies nothing about our social capital, nor does it imply we relax our altruism. We only know that altruism and tribal feelings can be extremely costly and collectively inefficient in modern society.